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August sees muted M&A activity; down 20% to $899 mn: Thornton

Mergers and acquisitions in India were down 20 per cent to USD 899 million in August which saw 42 transactions even as the outlook remains bullish, says Grant Thornton.

According to the assurance, tax and advisory firm, 47 deals worth USD 1.27 billion were recorded in August last year.

The M&A deal tally so far this year has reached USD 21.23 billion by way of 364 deals. In the January-August period of last year there were 367 transactions worth USD 22.18 billion.

“M&A remains subdued with volumes remaining about the same but deal values coming down by about 20 per cent as compared to same period last year. Most part of the M&A deal value has actually come from inbound investments,” Grant Thornton India LLP Partner Prashant Mehra said.

The report noted that M&A deal value has actually come from inbound investments, whereas domestic M&A activity and outbound transactions have been falling behind.

“This seems primarily because the corporate balance sheets continue to be stretched for cash to invest in inorganic growth and also foreign assets having become expensive due to the recent rupee depreciation,” Mehra said.

However, going forward, the deal activity is likely to improve in the coming months for domestic and outbound M&As.

“With the historical trends supporting the fact that domestic M&A usually picks up towards September and continues to grow for the next quarter or so and with the reform process hoping to see much more on-ground action, activity in this area will hopefully pick up in the next month or so,” he said.

Sector-wise, IT & ITES, pharma and hospitality attracted big ticket deals valued over USD 100 million.

Moreover, the month also witnessed one of the biggest acquisitions in the semiconductor space in India with Aricent Inc’s acquisition of SmartPlay Technologies for USD 180 million and second biggest deal in India’s travel space with Thomas Cook’s acquisition of Kuoni group’s travel business in India and Hong Kong for USD 84 million.

The article appeared in the Business Standard. The article can be found here.