Review on Mergers and Acquisitions Activity in India

The article talks about the analysis and views of EY (Ernst &Young) on the emerging trends of mergers and acquisitions in India in the past few years. The EY Global Capital Confidence Barometer is a biannual survey of over 1,600 senior executives from large companies around the world including 93 from India and across industry sectors. According to the article an official advisor working in EY says “Despite dynamic global geopolitical conditions, Indian corporates are positive on the domestic deal market on the back of a stable economy, positive deal market fundamentals and a promising deal pipeline.” The year 2017 was quite significant with the wide ranging regulatory uncertainty and demonetization consequences. The largest deal of 2017 in terms of value was the Vodafone Idea deal at $12,668 million. It was also a year of several unconsummated M&A deals.

1. The first one worth mentioning is the unsuccessful proposed merger between HDFC Life and Max Life. If this deal were to be final, we would have seen the largest private insurance provider in India.
2. Also, the much-hyped Flipkart-Snapdeal merger was finally called off in the later part of 2017. This transaction could have been the largest buyout in India.
3. The Zomato-Swiggy merger talks also broke down because of differences over business alignment and valuations.
4. The much hyped RCom-Aircel merger was also called off. Legal and regulatory uncertainties, and various interferences by vested interests were mentioned as the reasons for the unfortunate merger talks.

In contrast to 2017, the financial year 2016 set a record in the M&A space, with deals more than double the value of transactions in the year 2015. The consolidation across sectors and foreign investments resulted in this increase. Sectors like telecom, cement and energy contributed maximum in 2016. Rosneft-Essar Oil acquisition and the Vodafone-Idea merger were the important M&A deals.

The government's focus on reforms along with strong capital markets and favourable credit terms should stimulate investments and encourage corporations to dynamically plan their acquisition strategy. Indian respondents prefer the domestic market for M&A to tap growth opportunities. It ranks as the top destination of choice for Indian companies, followed by the US and UK. On the sector front, consumer products and retail and financial services are expected to remain active in the M&A market. The bottom line today is that both the strategic and financial investors are very so cautious and completely aware about the issues that could result in fiasco of M&A deals. The possible dangers if identified earlier and emphasized by the advisors to the business deal team, can help the owners to slow down and take a conscious decision. This not only saves costs, but the time of the business teams, which can be channelled to hunt alterative M&A proposals.