India M&A

Last year in India was remarkable not only for the resurgence in economic dynamism that followed the election of Narendra Modi, the prime minister. New data shows it was also a banner year for mergers and acquisitions.

In the calendar year to December 30, India saw deals worth $48.4bn, according to Dealogic, marking the highest value since 2010. Inbound deals were valued at $16.5bn, their highest level since 2011. Read more

Sun Pharmaceutical Industries, India’s biggest drugmaker by market value, agreed this week to buy its competitor, Ranbaxy, for $3.2bn from Japan’s Daiichi Sankyo, which paid 61 per cent more for the Indian company five years ago.

But given that Ranbaxy has been troublesome for its Japanese owner, what chance does Sun have of realising its aim to create synergies from the deal worth $250m over the next three years? Read more

There’s no doubt about it, 2013 was a tough year for the Indian economy. Growth slumped to below 5 per cent, a currency crisis swept through emerging markets battering the rupee, and all predictions for the economy hung – as they still do – on the upcoming general elections.

It doesn’t sound like the ideal investment climate. But professional services firm, Grant Thornton, insists that M&A activity in India was better than expected over the calendar year. Activity may be down, but given all that happened last year, it’s not down that much. Read more

It’s all looking up for the US this week. New figures show manufacturing activity is growing at its fastest pace since April 2011. Analysts have braced themselves for better than expected jobs data on Friday. Oh – and Indian IT outsourcing companies are funnelling money into the country. Read more

Bharti Airtel, India’s largest mobile operator by sales, is looking to issue debt, possibly through a eurobond, according to India’s Economic Times.

Although a bond issue isn’t officially announced yet, the company confirmed to beyondbrics that six banks have announced that Bharti has approached them, asking for meetings to be set up with fixed income investors from Wednesday. The six on the list are Barclays, BNP, Deutsche Bank, JP Morgan, Standard Chartered and UBS. And Moody’s, the credit rating agency, has assigned a rating to the bonds already. Read more

Shares in Apollo Tyres opened up more than 3 per cent on Tuesday at Rs76.90, adding to a gain of 4 per cent on Monday.

The stock is enjoying a nice run this week, having lost some 15 per cent since June 12, when the Indian group announced plans to acquire Cooper Tire and Rubber in a $2.5bn deal set to be the largest takeover of a US group for India. Read more

Airtel, India’s largest mobile operator by sales, is continuing its expansion into Africa. On Tuesday, it announced plans to acquire Warid Congo, making Airtel the largest telecoms provider in the Republic of Congo (also known as Congo Brazzaville).

Before the deal, Airtel was already the second largest telecoms provider in the country and Warid, the third largest. Read more

Investors have given a thumbs up to Fortis Healthcare, the Indian hospitals chain, after it announced plans on Monday to sell its private clinic network in Hong Kong to Bupa.

Shares in Fortis rallied 6.5 per cent on Tuesday morning before moderating to close up 0.7 per cent at Rs105.25. Read more

Full enough?

After an eight-month, three-step investment process, Diageo, the world’s largest distiller, has declared itself “the major shareholder” in United Spirits, the company that controls nearly 60 per cent of India’s drinks market.

But is that quite fair? “Major” shareholder? With a 25.02 per cent stake, Diageo still falls well short of majority shareholding and that creates questions around control. Read more

After overturning his predecessor’s decision on the Vodafone case on Wednesday, India’s new Law Minister, Kapil Sibal, has brought about another change that might reassure foreign investors.

Indian companies will now be able to use put and call options in M&A and private equity transactions, adding flexibility and clarity to the deal-making process. Read more

M&A activity is picking up pace in India. Last year 152 outbound deals were completed, together valued at $15.1bn, according to Dealogic. That’s up from $10.3bn from 193 deals in 2011 – and further growth is expected this coming year.

But a study by KPMG has found that 75 per cent of Indian companies doing foreign deals fail to create value in the first year after completion and 59 per cent of M&A deals actually destroy value. Will Indian groups learn how to implement their deals more effectively – and get a grip on the key challenge – post-deal business integration? Read more

Indian markets are buzzing with gossip about Larsen & Toubro (L&T), the Indian conglomerate, over two possible deals.

Although nothing is confirmed, analysts are expecting some deal activity to materialise – and the share price is getting a bumpy ride. Read more

Shares in Strides Arcolab dropped 6.9 per cent on Thursday to Rs917.25, after the Bangalore-based pharmaceuticals company confirmed it is selling off its injectables unit at a lower-than-expected price.

There have been several rumoured buyers for the subsidiary, Agila Specialities, but it was announced on Wednesday that Mylan, the US generic drug producer, is to pay $1.6bn in cash for the business. Read more

In September, the Indian government announced a spurt of policy initiatives greeted by commentators as a return to the reformist zeal shown in the early days of prime minister Mohamed Singh’s eight years in power. This “big bang”, designed to re-ignite economic growth, was also expected to reawaken interest in Indian equities among foreign investors. But investor interest in some Indian companies actually plateaued after the package was announced, according to new research.

How should equity investors respond? Read more

Shares in Gulf Oil, the lubricants business of the Mumbai-based Hinduja Group, rose 2.5 per cent on Friday as the company announced the completion of its $1.05bn acquisition of Houghton Oil, the US industrial fluids manufacturer.

It’s set to be the largest acquisition this year by a non-state Indian company, though it is dwarfed by the proposed $5bn deal made public last month, in which ONGC, the Indian state oil group, is buying a stake in Kazakhstan’s Kashagan oil field. Read more

When Indian IT company Infosys announced its $350m acquisition of Swiss management consultancy firm Lodestone on Monday, it was proof that the company, struggling against rivals Cognizant and Tata Consultancy Services, was ready to spend some of its $3.7bn cash reserves to help it develop more upmarket products.

But few other Indian companies – cash rich as they might be – have seen fit to do likewise abroad, according to data from Dealogic. Read more