M&A deals touch all-time high: Thomson Reuters

The value of announced mergers and acquisitions (M&A) deals involving Indian companies reached $99.7 billion in the first nine months of 2018, surpassing the annual record of $67.4 billion set in 2007, on the back of large ticket transactions.

M&A deals saw 125.9% increase in value year-on-year, while the number of announced deals grew 17.1% from a year ago, witnessing the busiest first nine-month period since records began in 1980, according to a Thomson Reuters India M&A report, released on Wednesday.

The average M&A deal size for transactions with disclosed values increased to $126.2 million during the first nine months of 2018 compared to $77.2 million over the same period last year.

“India-involvement M&A activity this year witnessed four mega deals above $5 billion (with a combined value of $32.9 billion) compared to only one during the same period last year (when the $11.6 billion Idea-Vodafone merger was announced),” the report said.

India is not alone in seeing an increase in M&A transactions. Globally there has been uptick in such deals. “The tide in mergers and acquisitions is turning,” according to The Boston Consulting Group (BCG)'s 2018 M&A Report–Synergies Take Center Stage, released last month.

“Acquisitions are more expensive today than at any time since at least 1990, and buyers need to give away a higher share of the total value of expected synergies in order to strike a deal,” said the report’s co-author Jens Kengelbach, BCG senior partner and head of the firm’s global Transaction Center.

Domestic M&A hit record levels with $46 billion, almost a three-fold increase in value from over a year ago, and surpassed annual all-time high in 2017 ($25.9 billion), the report said. The number of announced domestic deals saw the busiest first nine months period, up 19.4% from a year ago. Cross-border M&A reached $51.6 billion, up 92.8% from the first nine months of last year.

Foreign firms acquiring Indian companies reached $40.5 billion in the first nine months of 2018, a 64.6% increase in deal value from comparative period of 2017, surpassing annual record volume in 2017 ($31.5 billion). Number of inbound deals grew 26.3% from the same period last year.

This year, U.S.-based Walmart Inc. acquired Flipkart Group, a provider of online ecommerce retail services, from Softbank and Naspers Ltd, for $16 billion. The deal pushed the retail sector up to capture 42.9% of India’s inbound M&A activity for a total of $17.3 billion, a significant increase compared to first nine months of last year ($1.7 billion).