India M&A Trend Report: 2013 Overview M&A targeting India totalled US$ 20.8bn in 2013, 46.3% off the 2012’s value (US$ 38.7bn). Volumes too, witnessed a slight slump, with the 267 deals this year, 13 fewer than in 2012 The final quarter of 2013 saw an aggregate US$ 3.4bn-worth of deals, 40.4% below the US$ 5.7bn posted in Q3 2013. A mere 50 deals were announced in Q4 2013, the lowest number since Q1 2009 (39 deals) Unilever’s US$ 3.5bn acquisition of a 14.8% stake in Hindustan Unilever in April remains the largest deal in India this year and accounted for 16.8% of aggregate M&A value in the country The Pharma, Medical & Biotech experienced transactions amounting to US$ 4.2bn, making it the only sector to post a second successive increase in annual M&A value or volume Inbound M&A slid for the second year to US$ 14.3bn, a 19.7% decline from 2012 (US$ 17.8bn). The number of deals involving overseas acquirers however shot to a record high (since 2001) of 147. It appears that smaller targets are being snapped up by foreign buyers while larger deals are being stymied by concerns associated with the outcome of next year’s general elections Tighter access to credit is expected to result in several potential buying opportunities. The Reserve Bank of India ’sattempts to facilitate buyouts of distressed companies may provide a fillip for private equity activity, although onerous valuation restrictions announced this week will ensure persistent uncertainty in this regard Outbound bids in 2013 totalled US$ 7.7bn, a 22.2% increase from 2012 (US$ 6.3bn) largely due to two acquisitions worth US$ 5.1bn by state-run ONGC and Oil India off the coast of Mozambique. The number of deals in contrast, fell from 76 to 40 during the corres ponding period M&A Trend: India Industry Analysis Sector2013 2012 Change Value ($m) Mrk share Deal count Value ($m) Mrk share Deal count Value (%) Deal count Pharma, Medical & Biotech 4,169.8 20.1% 38 1,446.1 3.7% 30 188.4% 8 Construction 4,104.6 19.7% 16 670.7 1.7% 16 512.0% 0 Consumer 4,025.2 19.4% 24 6,760.3 17.5% 28 -40.5% -4 Industrials & Chemicals 2,356.8 11.3% 64 3,518.6 9.1% 67 -33% -3 Telecommunications 1,900.5 9.1% 7 791.8 2% 2 140.0% 5 Business Services 1,003.2 4.8% 32 4,308.6 11.1% 33 -76.7% -1 Energy, Mining & Utilities 1,001.7 4.8% 14 11,618.0 30% 16 -91.4% -2 Financial Services 784.1 3.8% 20 1,603.8 4.1% 18 -51.1% 2 Technology 769.4 3.7% 22 423.7 1.1% 14 81.6% 8 Transport 468.4 2.3% 7 4,782.5 12.4% 9 -90.2% -2 Media 166.3 0.8% 12 1,950.8 5% 18 -91.5% -6 Leisure 34.2 0.2% 4 549.8 1.4% 14 -93.8% -10 Agriculture 10 0.0% 3 149.9 0.4% 9 -93.3% -6 Defence - - - 13.8 0.0% 2 -100.0% -2 Real Estate - - 4 98.1 0.3% 4 -100.0% 0 Total 20,794.2 267 38,686.6 280 -46.2% -13 Cross-border analysis Deal size analysis 0 50 100 150 200 250 300 0 5 10 15 20 25 30 35 40 45 2007 2008 2009 2010 2011 2012 2013 N u m b e r o f d e a l s V a l u e o f D e a l s ( $ b n ) Value No. of Deals 0 20 40 60 80 100 120 140 160 0 5 10 15 20 25 30 2007 2008 2009 2010 2011 2012 2013 N u m b e r o f d e a l s V a l u e o f D e a l s ( $ b n ) Inbound Value Outbound Value Inbound Volume Outbound Volume 7.0 8.6 9.4 3.3 1.7 1.6 4.5 10.2 6.9 6.0 7.9 10.3 12.7 0 5 10 15 20 25 30 35 40 45 2013 2012 2011 Value of Deals ($bn) 0m-25 0m 251m -50 0m 501m -2, 000m 2,001m - 5,000m > 5,0 01m Citi displaced Morgan Stanley atop the Financial Advisor League Tabl e by value wi th seven deals totalling US$ 9.3bn - three of which were among the five largest deals so far this year. Ernst and Young retained its position as the most active Financial Advisor by deal cou nt with 21 mand ates Amarchand & Mangaldas & Suresh A Shroff & Coled the Legal Advisor League Tables by value after advising on 38 deals worth US$ 10.1bn. AZB & Partnerssecured 45 mandates to pip its nemesis and round off 2013 as t he most active legal advisor by volume
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Citi displaced Morgan Stanley atop the Financial Advisor League Table by value with seven dealstotalling US$ 9.3bn - three of which were among the
five largest deals so far this year. Ernst and Young retained its position as the most active Financial Advisor by deal count with 21 mandates
Amarchand & Mangaldas & Suresh A Shroff &Co led the Legal Advisor League Tables by valueafter advising on 38 deals worth US$ 10.1bn. AZB &Partners secured 45 mandates to pip its nemesisand round off 2013 as the most active legal advisorby volume
India PMB buyouts and exits analysis Pharma, Medical & Biotech projections
Both primary and secondary private equity buyouts are expected to increase
in 2013. Companies in the PMB space are seeking capital for expansion, which
should provide an ideal window of opportunity for private equity firms as
other exit options such as a strategic sale and IPOs are expected to remain
slow until the outcome of the 2014 general elections
An impasse between different government ministries regarding restrictions
on FDI in generic drug makers resulted in diminished strategic investor
interest. We expect foreign acquirers to remain wary of acquiring Indiantargets in spite of the government’s decision to retain the 100% FDI limit until
after the general elections
Indian pharmaceutical giants Cipla and Sun Pharmaceutical Industries are
known suitors and have reportedly been eyeing generic drug manufacturers
in Japan, Europe and the US. High interest rates and difficulties in raising
funds for deals will however continue to pose problems for Indian firms on
the acquisition warpath
Top Pharma, Medical & Biotech deals involving Indian targets
Ann. Date Bidder company Target company Seller company Bidder advisors Target/Seller advisors Deal Value(US$m)
27-Feb-13 Mylan Inc Agila Specialties PrivateLimited; and AgilaSpecialties Asia Pte Limited
All data is based on announced transactions over US$ 5m. Deals with undisclosed deal values are included where the target’s turnover exceedsUS$ 10m. Deals where the stake acquired is less than 10% will only be included if their value is greater than US$ 100m. Activities excluded includeproperty transactions and restructurings where the ultimate shareholders’ interests are not changed. All data excludes minority stake deals (10% -30%) where the dominant target geography is Asia-Pacific and the deal value is less than US$ 100m
M&A Trend: Based on the dominant geography of the target company being India. Excludes lapsed and withdrawn bids
Cross-border M&A: Inbound refers to cross-border M&A where the dominant geography of the target company is India. Outbound refersto cross-border M&A where the dominant geography of the bidder company is India. Excludes lapsed and withdrawn bids
Top Announced Deals: Based on the dominant geography of the target, bidder or seller company being India. Excludes lapsed andwithdrawn bids. FA refers to Financial Advisor and LA refers to Legal Advisor
Industry Analysis: Based on the dominant geography of the target company being India. Industry sectors represent the primary industrysector of the target company only. Excludes lapsed and withdrawn bids. The Buyout Sector breakdown includes Other which refers toBusiness Services, Leisure, Agriculture, Defence and Real Estate and. The Exit sector breakdown includes Other which refers to. Buyoutand Exit sector breakdown include TMT which refers to Technology, Media & Telecommunications
League Tables for Total India M&A: Based on the dominant geography of the target, bidder or seller company being India. The Financial Advisor tables exclude lapsed and withdrawn bids, and the legal advisor tables include lapsed and withdrawn bids
League Tables for Indian M&A Advisors: Based on the dominant geography of the target, bidder or seller company being India and the
advisor being an entity which is headquartered in India. The Financial Advisor tables exclude lapsed and withdrawn bids, and the legaladvisor tables include lapsed and withdrawn bids