2017 was an exciting year for Merger and Acquisition deals all over the world and in India as well. Multi-billion dollar deals like Amazon buying Whole Foods, Intel acquiring Mobileye, and Rosneft taking over Essar Oil grabbed headlines all over the world. Closer home, Flipkart acquired the Indian arm of Ebay, Axis Bank took over Freecharge, and Vodafone India and Idea merged to take on new and existing rivals in the sector. However, as we step into the next year, a flurry of reports and publications tried to put things in perspective by quantifying the value of deals that took place and predict what 2018 holds in terms of M&A. Here’s a look at some of them:
Bloomberg Report: M&A deals increased over 50%
- Bloomberg data shows that M&A deal values in India increased by 53.3% to $77.6 billion in 2017, and the top five of these deals accounted for 57% of the total share ($44.3 billion in value).
- In terms of volume, the number of deals rose by 2.5% (614 deals as compared to 599).
- 92.5% of the total M&A deals were the size of less than $500 million. Furthermore, deals in the range of $500 million to $5 billion accounted for approximately 6%, and just 1% of the deals were valued at over $5 billion.
- The Communications sector took the lions’ share of the total deals, with $33.17 billion in value (42.7%). This was followed by Energy, $16.57 billion (21.34%), Industrial, $7.8 billion (10%) and Financial Services, $7.36 (9.5%).
- 235 cross-border deals consisted for nearly 58% of the total deal value, at nearly $45 billion.
- The report named some of the top deals of the year, and said that industry experts believe that the momentum of the deals with continue this year.
Thomson Reuters Report: Volume of deals increased, but drop in value
- The value of announced M&A deals involving Indian companied totalled to $62.1 billion 2017, down 3.5% compared to 2016. However, the number of announced deal grew by 10.6% compared to the last year.
- The average value of the deal came down to $84.6 million this year from $102.3 million in 2016. While inbound M&A deals hit a high of $31.7 billion (an increase of 15%), outbound M&A activity declined by 73.5% to $2.6 billion.
- Domestic M&A deals stood at $25.4 billion (down 0.5%), but increased 18.6% in volume from last year.
- The number of deals involving Indian organisations in 2017 amounted to $59.4 billion, an increase of 78.3%; the number of deals increased by 27.3%.
- Telecom (29.8%), financial (16.7%) and high-technology (11%) sectors were the top three sectors in terms of share in the total M&A deals.
Assocham Year Ahead Outlook: 2018 set to witness M&A buzz
- Asshocham compiled data from multiple sources and stated that M&A transactions witnessed a ‘quantum jump’ of 170% in valuation, and 70% in number of deals.
- 944 transactions (644 domestic and 280 cross-borders) worth $46.5 billion took place in 2017, according to the paper, up from 553 transactions worth $17.5 billion in 2016.
- The sectors of healthcare, telecom, energy, real estate, media and entertainment, banking, insurance and oil and cement saw the maximum number of deals taking place.
- As for 2018, the paper says that deals worth nearly $50 billion can be expected, as there is an abundance of stressed corporate assets, which make for tempting valuations.
Despite the difference in numbers (which can be attributed to the different methodology and eligibility of data collection by the agencies) one thing is clear: 2017 saw some strategic, important and massive mergers and acquisitions. Just like banking, telecom and technology leading the way in terms of number of deals came as no surprise; one can almost surely assume that this year will witness more frequent mergers and acquisitions, across different sectors. Even globally, the space is likely to remain in news for the foreseeable future.
Sources:Bloomberg Data
Thomson Reuters Report
Assocham Year Ahead Outlook