July sees M&A deals worth $4 bn

Year tally hits $20 bn

Merger and acquisition deals worth $4 billion were announced in July, thanks to a significant surge in domestic and inbound deal activity, taking the year-to-date deal tally to $19.87 billion.

According to assurance, tax and advisory firm, Grant Thornton’s latest Dealtracker report, there were 44 M&A deals worth $4,083 million in July, while in the corresponding period last year, there were 43 transactions worth $2,082 million.

The overall M&A market witnessed significant surge in deal values (96 per cent year-on-year) with intensive domestic and inbound deal activity.

Domestic deal activity grew exponentially, over 8 times year-on-year contributing over 40 per cent of the total deal values in July 2016. So far this year (January-July) there were 301 M&A deals worth $19,875 million, while in the corresponding period last year there were 319 such deals worth $16,216 million.

“On the M&A front, though cross-border deals remained at par with the previous year, there has been a 8-fold increase in value in domestic M&A which contributed over $2 billion this month,” Prashant Mehra, Partner, Grant Thornton India LLP said. Mehra further noted the effect of the passage of the GST Bill would soon be witnessed across the deal market whether it is PE, domestic or cross-border M&A.

“We expect a rise in both cross-border as well as domestic M&A, driven by the need for consolidation and this should be primarily seen in the infrastructure and manufacturing sectors,” Mehra said.

A sector-wise analysis shows, in July, pharma, healthcare and biotech sector led the deal activity driven by Fosun Pharmaceuticals USD 1.3 billion majority stake acquisition of Gland pharma making it the largest inbound deal in the sector since May 2014.

July also witnessed what is estimated to be India’s largest leveraged buyout with Nirma’s acquisition of Lafarge India, where nearly 80 per cent of the total deal value is expected to be paid through borrowed funds, the report said.

IT&ITES, energy and natural resources sector also witnessed big ticket deals while the startup sector saw higher volumes driven by increasing consolidation in the sector, the report noted.