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Poor market mood brings down M&A deals’ value

Amid economic uncertainties hurting business prospects, the value of mergers and acquisitions deals involving Indian companies nearly halved to USD 3.4 billion in the three months to September compared to year-ago period, according to global consultancy Ernst & Young.

In the September quarter of 2011, the overall value of M&A transactions stood at USD 6.9 billion.

Global consultancy Ernst & Young on Tuesday said the value as well as number of disclosed merger and acquisition deals slumped in the 2012 September quarter.

The M&A deal count fell to 161 in latest September quarter compared to 202 transactions in the year-ago period.

‘The current economic environment both at the domestic and global level had its bearing on the Indian M&A activity in the last three months. Besides, several cash-rich companies are playing the waiting game,’ E&Y partner and national director [ Transactions a dvisory Services] Amit Khandelwal said.

However, he noted that the recent flurry of policy reforms announced by the government should boost the investor sentiment and ‘consequently, M&A activity in the coming quarters’.

E&Y said that outbound deals increased significantly in terms of value but decreased in terms of count.

‘When compared to 3Q’11, this quarter’s outbound M&A declined significantly in both deal count and deal value [from USD 3.8 billion].

‘Besides the current economic headwinds, the reasons for India Inc’s caution on foreign acquisitions could be the recent wave of resource nationalism sweeping the globe and a weak Indian rupee,’ E&Y said in a statement.
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