Merger and Acquisitions dip

The continuing recessionary fears in the world's largest economy, has dented India Inc's US-bound merger and acquisition activities, which dropped 30 per cent to 5.1 billion dollars in the first six months of 2008, according to an investment bank and advisory firm.

In the first half of 2008, Indian companies accounted for a total of 34 US-bound acquisitions worth over USD 5.1 billion, US-based Virtus Global Partners said in its latest report on US bound acquisition by Indian companies.

However, the volume of deals dropped 15 per cent to 34, from 40 in the H1 of 2007.

The mega size M&A deal in the first half of 2008, include Tata Chemicals acquisition of General Chemicals for USD one billion, GMR Energys purchase of 50 per cent equity in Intergen for USD 1.1 billion and Sterlite Industries announced bid for Asarco valued at USD 2.6 billion. Over 70 per cent of the transactions involved acquisition of 100 per cent stock for cash consideration.

Despite a slowdown in the M&A volume, IT/ITES remained the most acquisitive sector capturing over 50 per cent share of the total US-bound transactions by volume, the report stated.

"The high rate of US-bound acquisition activity is being propelled by the need to gain scale in terms of size, product offerings and geography. The first six months of 2008 also demonstrate an underlying business model change - from a cost-centric approach to a profit-margin focus," the report pointed out.

As per the report, the acquisition of Regulus Group by 3i Infotech for USD 100 million, Caterpillar Inc by Satyam Computer for USD 60 million and Jass & Associates Inc and SDG Corporation by Mascon Global for USD 55 million are among the top US-bound M&A deals.