The value of announced mergers & acquisitions (M&A) deals involving Indian companies reached US$37.0 billion in 2014, a 25.5% increase compared to 2013. This is the highest annual period for overall Indian announced M&A since 2011 (US$37.6 billion).
The average M&A deal size for transactions with disclosed values climbed up to US$79.1 million in 2014 (compared to US$67.6 million over the same period last year), as more deals were announced valued US$500-million-and-above.
Domestic M&A stood at US$17.4 billion, up 245.7% over a year ago. This was driven by at least three deals above US$1-billion in value, including Sun Pharmaceutical’s pending acquisition of Ranbaxy Laboratories for US$4.1 billion in a stock swap transaction. The deal pushed the Healthcare sector to capture 26.1% of India’s domestic activity.
Total cross-board M&A dropped 39.2% to US$13.9 billion compared to 2013 as both inbound and outbound activity declined from the comparative period last year. Inbound M&A fell 27.2%, while Outbound M&A decreased 65.0% from last year.
Completed M&A deals involving Indian companies totaled US$25.7 billion, a 12.8% decline compared to 2013 (US$29.4 billion).
Healthcare Captured 17.2% Market Share – Highest since 2010
The Healthcare sector accounted for majority of the acquisitions involving Indian companies with 17.2% market share worth US$6.4 billion, a 24.6% increase from the 2013, and the highest annual period since 2010 (US$7.2 billion). Energy & Power sector followed next and captured 16.7% of the market share with US$6.2 billion worth of deals, down 8.9% from last year.
The TMT sector (Technology, Media, and Telecommunications) captured an aggregate market share of 18.5% as combined deal value increased 15.8% to US$6.9 billion from 2013.
Private Equity-backed M&A in India Up 36.3%
Buyside Financial Sponsor M&A activity targeting Indian companies totaled US$3.4 billion in 2014, up 36.3% in deal value compared to 2013, and witnessed the highest annual period since 2011 (US$4.6 billion). This was driven by Canada Pension Plan Investment’s acquisition of Kotak Mahindra Bank Ltd from Kotak Trustee Co Pvt Ltd for a total value of US$371.5 million (INR21.986 billion) in a privately negotiated transaction. In addition, Canada Pension Plan Investment also agreed to acquire an undisclosed minority stake in L&T Infrastructure Development Projects from Larsen & Tourbo Ltd for US$322.2 million (INR20 billion), in a privately negotiated transaction.
India Inbound M&A Activity Down 27.2 %
Foreign firms acquiring Indian companies reached US$11.3 billion in 2014, a 27.2% decline from 2013 despite an 11.5% increase in number of announced deals.
The bulk of inbound acquisitions focused on the Consumer Staples sector in terms of deal value with US$2.4 billion worth of transactions, despite a 35.7% decrease over a year ago. Consumer Staples captured 21.5% of India’s inbound M&A activity followed by Healthcare and Energy & Power with 13.2% and 12.6% market share, respectively.
United Kingdom is currently the top acquirer of Indian companies in terms of value with US$2.9 billion from 23 announced deals, and accounted for 25.3% of India’s inbound M&A activity. Meanwhile, United States saw the most number of deals with 112 announced M&A transactions worth US$2.6 billion, down 32.8% in value from the same period last year.
India Outbound M&A Declined 65.0% – Lowest since 2009
Indian acquisitions overseas stood at US$2.5 billion in 2014, a 65.0% decrease from last year, and the lowest annual period since 2009 when volume dropped to US$1.2 billion.
India’s outbound acquisitions focused on the Industrials sector as deal value reached US$ 614.6 million, up 85.1% over a year ago, and captured 24.1% of India’s foreign acquisitions. Energy & Power sector followed behind with 19.5% market share, or US$496.1 million worth of transactions.
United States was the top most targeted nation in terms of value and number of deals and accounted for 40.0% of the market share worth US$1.0 billion from 39 announced transactions.
Completed M&A Advisory Fees in India Up 6.5%
According to estimates from Thomson Reuters/ Freeman Consulting Co., M&A advisory fees from completed transactions in India totaled US$131.9 million in 2014, a 6.5% increase from the comparable period last year.
Bank of America Merrill Lynch took the top spot for imputed fee rankings on M&A advisory work related to completed M&A deals in India for 2014 with US$17.6 million, and accounted for 13.3% market share of the fee pool.