Sei sulla pagina 1di 22

Mergers & Acquisitions

Current Scenario and Way Ahead


Gautam Doshi June 2010

Current Scenario

Revival in deal activity in the country More than double the transactions in first five months as compared to same period last year
Jan May 10 No of deals Value of deals 439 USD 30 bn Jan May 09 179 USD 8 bn

Rebound linked to recovery of Indian and global economy Active sectors Telecom, Pharma, Cement, FMCG

Mergers & Acquisitions


Deal Summary 2008 2009 Deal Summary Total Inbound Outbound Total Cross Border Domestic Total M&A Volume 2008 2009 86 74 196 82 282 156 172 174 454 330 Value (USD bn) 2008 2009 12.55 3.88 13.19 1.38 25.74 5.26 5.21 6.70 30.95 11.96

Source: Grant Thornton Deal Tracker

Mergers & Acquisitions


Top 5 M&A Deals - 2009

Top 5 M&A Deals - 2008

Source: Grant Thornton Deal Tracker

Mergers & Acquisitions


Deal Summary - Jan-May 2010 Deal Summary Total Inbound Outbound Total Cross Border Domestic Total M&A Volume 2010 34 85 119 198 317 Value (USD bn) 2010 4.88 17.70 22.58 3.46 26.04

M&A Deal Value - Volume 5 Month Trend 14 12 10 8 6 4 2 0 3 13 89 56 60 68 8 44 1 1 Mar-10 Value Apr-10 Volume May-10 100 80 60 40 20 0 Jan-10 Feb-10

Source: Grant Thornton Deal Tracker

Number of deals

Value (USD bn)

Mergers & Acquisitions


Top 5 M&A Sectors - 2010 Sector Telecom Pharma & Metals, Ores & Banking & Financial Services FMCG, Foods & Beverages Volume USD mn 6 13,518 21 4,854 6 2,524 18 9 2,192 541 % 52 19 10 8 2

Top 5 M&A Deals - 2010 Acquirer Bharti Airtel Abbott Labs Target % Stake USD mn Zain Africa 100% 10,700 Domestic 100% 3,720 Formulations Business of Piramal Healthcare Solutions KBL European 100% 1,863 Private Bankers Aircel's 17500 100% 1,787 telecom towers Zinc business of 100% 1,340 Anglo American Plc

Hinduja Group GTL Infrastructure Vedanta Resources

Source: Grant Thornton Deal Tracker

Private Equity
Deal Summary - 2008, 2009 Deal Summary Total Private Equity Volume Value (USD bn) 2008 2009 2008 2009 312 260 10.59 12.05

Source: Grant Thornton Deal Tracker

Private Equity
Top 5 PE Deals - 2009

Top 5 PE Deals - 2008

Source: Grant Thornton Deal Tracker

Private Equity
Deal Summary - Jan - May 2010 Deal Summary Total Private Equity Volume 2010 Value (USD bn) 2010 122 4.02

PE Deal Value - Volume 5 Month Trend 50 40 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00

40 30 20 10 0 29

1.25 20 0.58 18 0.57

15 0.26 Apr-10 Volume May-10

Jan-10

Feb-10

Mar-10 Value

Source: Grant Thornton Deal Tracker

Number of deals

Value (USD bn)

1.37

Private Equity
Top 5 PE Sectors Sector Real Estate & Infrastructure Management Banking & Power & Energy Telecom Cement Volume USD mn % 14 20 4 1 2
Top 5 PE Deals Acquirer Investee % Stake Quadrangle Capital Tower Vision India NA Unnamed Investors GMR Infrastructure Ltd Unnamed Investors Yes Bank Temasek Holdings GMR Energy Ltd GNVF, IDBI, IFCI, Gujarat State etc Petroleum Co NA NA NA 5% USD mn 300 298 225 200 211

519 720 318 300 222

13 18 8 7 6

Source: Grant Thornton Deal Tracker

10

Positive Trends

Market in favour of consolidation

Higher degree of homogeneity across markets due to globalization Marginal costs of set up in new markets Brand identity recognizable across markets Market dynamics favour fewer players economies of size and scale Recent examples Bharti Zain, GTL Tower deal

11

Positive Trends

Flexibility and pragmatism demonstrated by Indian Promoters


Promoters recognise strengths and weaknesses and willing to adapt No stigma attached to alienation of stake in companies Ability to gauge time to encash vs carry on Recent examples Ranbaxy, Piramal, Wockhardt, Tata Docomo

12

Positive Trends

Availability of credible information


Reliable standards of accounting transition to IFRS Higher levels of transparency and corporate governance

Breadth and depth in the financial sector


Increase in number of players in the financial intermediary market Emergence of investor classes with different risk appetites

Angel investors, VC, PE, FIIs, Domestic cos, Foreign cos, Retail investors

13

Positive Trends

Certainty in regulatory framework


Clarity in tax provisions relating to slump sale Incorporation of M&A provisions in direct and indirect taxes

14

Roadblocks

Positive trends yet to achieve full potential


Greater flexibility to be shown by Indian promoters Need for consolidation not fully recognized

Grey areas in regulatory framework


Lack of clarity on stamp duty liability 80IA provisions not conducive to mergers and acquisitions

15

Roadblocks

Restrictive foreign exchange controls and listing norms


Direct listing of Indian shares on foreign exchanges not allowed Indian companies not allowed to merge with foreign companies Foreigners individually not permitted to invest in Indian shares Restricts usage of Indian shares as currency for deals

Increasing protectionism

Governments keen on retaining national identity of iconic companies Increasing use of capital controls to regulate flow of foreign capital

16

Roadblocks

Accounting for M&A under IFRS


Appointed date of merger vs actual date of merger Purchase method of accounting valuation of intangibles and off balance sheet items and residuary goodwill

Marked departure from Indian GAAP no comparability pre and post IFRS

Capital Reserve vs Credit to P&L A/c MAT impact


Demergers to be treated as non-cash dividend change in accounting for transferor

IFRS to apply to top 50 companies different norms applicable to


different companies at same time

17

Wishlist

Certain shortcomings in IFRS to be addressed


Few norms contribute to volatility and subjectivity in fin statements Accounting for FCCBs Lease Equalization vs Inflation Fair degree of subjectivity in fair valuation norms

18

Wishlist

Regulations to encourage cross border M&A


Indian companies to be allowed to merge with foreign companies Capital controls to be lifted on the Indian rupee Listing on foreign exchanges to be allowed and vice versa Permit accounting and reporting in functional currency

19

Wishlist

Rationalization of tax provisions


Tax liability only on encashment - not on exchange or conversion Tax benefits to continue in case of mergers Clarity on treatment of depreciation post transaction Introduction of group relief Introduction of anti-abuse provisions like CFC and thin capitalization rules

As opposed to current anti-abuse norms prescribed in DTC

20

Wishlist

Better protection of minority rights in corporate law


Strengthen norms on independent directors and corp governance Suitable amendments in listing agreement Provisions to eliminate conflicts of interest in cases where management also holds majority shares

21

Thank You

22

Potrebbero piacerti anche