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Indian M&As touch $37b in two months
[20 Apr, 2007 l 0237 hrs ISTlTIMES NEWS NETWORK]
MUMBAI: The deal street in India has been buzzing since the new year started. In 2007, in just two months, the total value of mergers and acquisitions (M&As) involving Indian companies was about $37 billion, compared to $20.3 billion during the whole of 2006: That's a near-doubling of value in one-sixth the time.
Outbound deals â where Indian companies are venturing out for foreign buyouts â are much larger in number and value than inbound deals (where foreign companies are buying into domestic entities), noted Dealtracker, a quarterly report on India-related M&As by consulting major Grant Thornton.
The commodities sector, which includes industries like metals, steel and cement, contributed over 50% of the value of all deals announced so far in 2007. The next big contribution came from the telecom sector, the report noted. However, it also noted that the spurt in deal value was mainly because of a handful of high-value deals, rather than a general increase in the number.
The report noted that in the commodities space, total value of M&As was nearly $21 billion, six times the previous
year's value, calculated at $3.5 billion. The jump was mainly because of two deals: Tata group's acquisition of
European steel major Corus and Hindalco's buyout of Novelis.
The key rationale for outbound deals was to make significant strides in the international market by making high value acquisitions. "It is notable that in most of these large deals, the acquirer has bought companies with values larger their own revenues," the report noted. Tata Steel's acquisition of Corus was valued at $13 billion, while the former's current revenue is about $4 billion. Similarly, Hindalco's acquisition of Novelis was valued at $6 billion while Hindalco's revenues are about $4 billion.
One of the reasons for such high value deals is the tremendous increase in confidence and support shown by banks and financial institutions in these Indian companies. Many of the large outbound acquisitions are leveraged buyouts. "We believe that several other Indian companies in the steel, metal, energy and other sectors are exploring large international acquisitions," the report noted.
Among the inbound deals, the most significant was Vodafone's acquisition of Hutch's 67% stake in Hutchinson Essar for $12.6 billion and Mittal Investments $711 million buyout of 49% stake in Guru Gobind Singh Refineries. The rationale for some of the inbound deals was to expand capacity by acquiring companies in India with higher margins at attractive valuations, Grant Thornton noted.
http://timesofindia.indiatimes.com/...uch_37b_in_two_months/articleshow/1926106.cms
[20 Apr, 2007 l 0237 hrs ISTlTIMES NEWS NETWORK]
MUMBAI: The deal street in India has been buzzing since the new year started. In 2007, in just two months, the total value of mergers and acquisitions (M&As) involving Indian companies was about $37 billion, compared to $20.3 billion during the whole of 2006: That's a near-doubling of value in one-sixth the time.
Outbound deals â where Indian companies are venturing out for foreign buyouts â are much larger in number and value than inbound deals (where foreign companies are buying into domestic entities), noted Dealtracker, a quarterly report on India-related M&As by consulting major Grant Thornton.
The commodities sector, which includes industries like metals, steel and cement, contributed over 50% of the value of all deals announced so far in 2007. The next big contribution came from the telecom sector, the report noted. However, it also noted that the spurt in deal value was mainly because of a handful of high-value deals, rather than a general increase in the number.
The report noted that in the commodities space, total value of M&As was nearly $21 billion, six times the previous
year's value, calculated at $3.5 billion. The jump was mainly because of two deals: Tata group's acquisition of
European steel major Corus and Hindalco's buyout of Novelis.
The key rationale for outbound deals was to make significant strides in the international market by making high value acquisitions. "It is notable that in most of these large deals, the acquirer has bought companies with values larger their own revenues," the report noted. Tata Steel's acquisition of Corus was valued at $13 billion, while the former's current revenue is about $4 billion. Similarly, Hindalco's acquisition of Novelis was valued at $6 billion while Hindalco's revenues are about $4 billion.
One of the reasons for such high value deals is the tremendous increase in confidence and support shown by banks and financial institutions in these Indian companies. Many of the large outbound acquisitions are leveraged buyouts. "We believe that several other Indian companies in the steel, metal, energy and other sectors are exploring large international acquisitions," the report noted.
Among the inbound deals, the most significant was Vodafone's acquisition of Hutch's 67% stake in Hutchinson Essar for $12.6 billion and Mittal Investments $711 million buyout of 49% stake in Guru Gobind Singh Refineries. The rationale for some of the inbound deals was to expand capacity by acquiring companies in India with higher margins at attractive valuations, Grant Thornton noted.
http://timesofindia.indiatimes.com/...uch_37b_in_two_months/articleshow/1926106.cms
