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Cross-border
acquisitions have be-come a common phenomenon across the globe.
Till recently, most of the Indian companies were eaten up
by overseas acquirers. But, in recent years, the Mergers and
Acquisitions (M&A) scenario has changed. The Indian corporates
have started acquiring companies abroad to expand their scale
of operations with a view to becoming global players. Although
a majority of the acquisitions made are below $1 bn in size,
a significant number of outbound deals have been witnessed
last year.
The
Tata Tea's acquisition of Tetley was a remarkable deal in
the history of Indian M&A business. The year 2005 witnessed
a record number of 343 M&A deals worth a whopping $16.2
bn. Out of 10 cross-border M&A deals, seven were outbound
last year. The proportion of cross-border deals to the total
M&A activity was 58% in value and 56% in volume in 2005.
Outbound deals numbering 136 totally dominated the cross-border
acquisitions (192).
Even
in the first two months of 2006, a similar trend was witnessed,
with the period recording 57 deals worth over $3.5 bn. The
number of cross-border deals constituted a significant 78%
of the total deals completed in 2006. The value of outbound
deals was $2.2 bn, which was nearly 63% of the total M&A
deal. The major outbound deals included ONGC Videsh Ltd.'s
acquisition of a Brazilian oil field worth $1.4 bn and Dr.
Reddy's acquisition of Betapharm for $570 mn. Another major
acquisition deal that needs mention here is Suzlon Energy
Ltd.'s acquisition of EVE Holding NV in Belgium for $565 mn
in March, which gives it indirect ownership of Hansen Transmissions
International NV. |
