VR Logo

India-specific M&A deals fall to 4-yr Low

Economic slowdown has hit takeovers

The seeds of 2008 have created  a bitter harvest for India Inc in 2009. Last year saw the Indian and global stock markets tumble from their highest-ever positions to virtually their lowest in decades and this was reflected in the global slowdown that affected all economies from the developed world to the least developed.

That the weakness of companies to weather these once-in-a-half-century storms stood exposed. In fact, many global companies that once ruled the banking, realty, insurance and other sectors folded up and disappeared without a trace. Others were saved by their governments, otherwise their fate too was sealed.

In India, this has led to a shift from raw aggression where mergers and acquisitions are concerned to a virtual slinking into a moribund phase.

According to Dealogic, the M&A game being played by the Indian corporates has seen a huge fall in 2009--the lowest in four years at $7.4 billion. This is a 51% fall from last year's corresponding figure.

And even out of these, the in-bound M&A activity to the tune of $1.6 billion involved foreign entities buying into Indian firms.

The figures for Indian companies buying into foreign firms are worse. These deals fell to a low of just $334 million, a 96 per cent fall.

The India deals involved Reliance Industries increasing stake in Reliance Petroleum by 25 per cent for $1,688 million via an open offer--the total oil and gas segment M&A activity totalled $2.1 billion alone. The second one was Quippo Telecom taking a 49 per cent stake in Wireless II Infoservices for $1,296 million. The third deal involved Tata Tele merging its tower arm with Quippo Telecom.

The most notable of these deals was the latest one where Tech Mahindra picked up control of the beleaguered Satyam Computer  for $577 million.