Weak domestic sentiments pull down M&A deal value

Chennai: Sluggish domestic sentiments pulled down merger and acquisition activity in October by 45 per cent in value terms and 40 per cent in volume terms against the year-ago month.

The month recorded 28 M&A deals worth $1.5 billion against 48 deals valued $2.8 billion in the corresponding period last year, found Grant Thornton’s M&A Dealtracker.

The slow economic growth, uncertainties and slew of corrective measures by the government saw domestic deals declining 25 per cent in volumes and 90 per cent in value. Against deals valued $2294 million in October 2018, last month saw just $226 being transacted through domestic deals.

The weak sentiments also affected outbound deals as the values fell 71 per cent in October. Even October 2018 had witnessed 58 per cent fall in deal values against the same month in 2017.  

The largest bet on India’s clean energy - Total SA’s purchase of 37 per cent stake in Adani Gas for $ 0.9 billion - was the most significant deal of the month. It accounted for 64 per cent of total M&A deal value. The sector also witnessed two other deals, totalling the sector value to $1 billion.

“M&A activity in October 2019 witnessed 45% and 40% drop in deal values and volumes respectively as compared to October 2018 primarily due to low activity in the domestic deal trends. October 2018 had reported four large domestic transactions aggregating to about USD 2.1 billion; one in the energy and natural resources sector, two in the media and entertainment sector and one in the FMCG segment,’ said Pankaj Chopda, Director, Grant Thornton India.