China Flexes Its M&A Muscles

Julyl 15 - N.Y. Times Blog - The Olympics will give China a chance to celebrate its status as a political and economic heavyweight. The games also come as the Asian nation has been raising its profile in the deal-making business.

While the volume of mergers and acquisitions around the world was down 30 percent in the first half of the year compared with the same time in 2007, transaction volumes were actually up 5 percent in Asia, in large part because of aggressive buying by Chinese companies. Read More.

Private equity pours into Indian media sector

July 4 - TelevisionPoint.com (India) - Do you know that 55% stake in INX Media is held by Temasek Holdings, New Silk Route Partners, New Vernon Private Equity Fund and Employee sweat equity.

Do you also know that the shareholding pattern of NDTV Networks includes Lehman Brothers, Goldman Sachs, CSFB and eight others, who jointly hold as much as 24% stake in it.

The Indian Media and Entertainment sector has never been a hot cake among PE investors. But of PE firms are showing great interest in the sector. Blackstone's 26% stake in Ushodaya Enterprise for $ 146 million, Chrys Capital's 27% stake in Hathway cable for $ 120 million, Shyam Equities' 20% stake in Independent News Service, holding company of India TV for $ 25 million are few examples. Read More.

More mergers seen in U.S. defense space

June 25 - Reuters (U.K.) - Italian defense manufacturer Finmeccanica SpA's recent $4 billion acquisition of U.S. defense company DRS Technologies Inc was a big one, but it is not the last one.

More European defense manufacturers looking to gain a presence in the U.S. defense market -- the world's largest -- will likely be targeting U.S. defense suppliers.

Increasing acquisition activity is also expected within the domestic defense sector as suppliers consolidate to become one- stop shops for manufacturers such as Boeing Co, Lockheed Martin Corp and Northrop Grumman Corp. Read More.

Private equity Asia – the market today

June 23 - FinanceAsia.com - Asia has been an area of focus for a number of global and local private equity players for many years. The credit crunch has prompted an even larger number of financial sponsors from the US and Europe, and the advisers who look to work with them, to ramp up their Asian presence and make it a key market for their business. Of course, simply increasing presence and capital available in Asia will not be enough for private equity players to succeed in the region.

Asia continues to present some formidable challenges to private equity investment. While these vary from country to country, generally speaking they include a combination of cultural, commercial and regulatory factors that get in the way of successfully investing and successfully exiting in a time honoured fashion. In many markets, and in particular in the two markets which dominate Asian investing - China and India - this means that even the basic LBO deal model that has served private equity so well in the US and Europe often cannot be used. Having said that, certain innovative (and highly structured) solutions have been developed to overcome this issue in India. Read More.

Research shows 2008 may be the best year for M&A

June 17 - Innovatives Report (Germany) - Results from the latest stage the of ongoing Towers Perrin/Cass Business School research looking at the value created in the last three global M&A cycles reveals that, contrary to received wisdom, 2008 may be the best time to do a deal.

This most recent part of the study looked at the performance of companies before and after peak years of the cycles. Together with Towers Perrin, Scott Moeller, Professor of Mergers and Acquisitions at Cass, examined the two prior merger waves and found the post-peak years (1990 and 2000) delivered higher shareholder value compared with deals in the frenzy of the M&A booms. This was true for all deals, although the research focused on those between $400 million and $1.5 billion in size (adjusted for inflation).

Combining the two waves gives a clear and statistically significant picture of performance in pre-peak, peak and post-peak years. The post peak years show the performance outperformed the MSCI World Index by 5.4% on average over the two periods. Read More.

Report: M&A seen strong among private companies

May 23 - Corp DealMaker Blog (The Deal) - The folks over at Grant Thornton International Ltd. put together an international business report, entitled titled Mergers and acquisitions: Opportunities for global growth. The report confirms what we've been hearing for months: that the recent tightening of lending policy and an uncertain economic outlook has had an impact on transactions worldwide at the top end of the market.

But they also found that privately held businesses in the BRIC economies, North America, mainland Europe, the U.K. and Ireland, and the rest of the world are confident about their prospects for M&A over the next three years. Privately held businesses in China were the most bullish, with 67% predicting deal activity over the next three years, followed by Brazil at 64%. Forty-eight percent of private U.S. businesses expect to do deals in the time period. Read complete report.

India's Global M&A Boom

Indian corporations, established at home and seeking new markets, are flush with cash and spending it abroad. But have they gone overboard?

Bharti Airtel, India's largest telecom player, is in the midst of talks to acquire a 51% stake in South African telecom major MTN in a deal that could be worth $20 billion. It's unclear whether Bharti's bid will succeed, but plenty of other Indian companies have been on a global shopping spree. On May 1, Essar Steel Holdings announced its third overseas acquisition in a year—the Nasdaq-listed Esmark for $1.1 billion. In March, Tata Motors acquired Jaguar and Land Rover from Ford. And investment bankers say there are 10 more acquisitions by Indian companies in the pipeline over the next six months. Read More.

India comes of age in M&A, but not always smooth

May 9 - Reuters - Bharti Airtel's overtures towards South African telco MTN Group, which could lead to India's biggest foreign takeover, are a sign that big Indian firms are hungry for deals and undaunted by a global credit crisis that has dented M&A activity around the world.

While Bharti shares have been hit as analysts query the mobile firm's ability to fund a deal that could top $20 billion, few doubt there will be more acquisitions by increasingly outward-looking Indian firms.

"Indian corporates have come of age," said Pramit Jhaveri, head of investment banking at Citi India, which advised Tata Motors on its $2.3 billion buy of Ford Motor's Jaguar and Land Rover brands in March. Read More.

Cement industry to witness dip in M&A valuation

May 5 - The Financial Express (India) - India's cement industry, that is currently undergoing a consolidation and market leadership phase, will now witness a fall in the valuations of M&A deals. With cash flows at an all time high and capacity utilisation bursting at the seams, the cement industry, that has witnessed transactions happening at higher valuations, will now see a dip of 15% to 20% in M&A valuations going forward, say experts.

Says Sourav Mallik, associate director- investment banking at Kotak, "The cement industry is witnessing a fall in earnings and valuations. More M&As in the sector will now be driven by a strategic desire to exit rather than a financial compulsion to restructure." Read More.

Global M&As cross $1 tn in '08; India share just 1 pc

April 20 - The Economic Times (India) - The ongoing crisis in global financial crisis notwithstanding, the value of merger and acquisition deals announced across the world has crossed $1 trillion mark since the beginning of this year.

However, India's share in this global tally is just about 1 per cent, or about $10 billion. This is less than half of about 2.5 per cent share in the comparable period of 2007.

While the value of year-to-date global deals has declined by 27 per cent from the comparable period of 2007, that for deals involving India Inc has dropped by 71.5 per cent. Read More.

US opposes M&A rules

March 31 - The Times of India (New Delhi) - The US has asked India to remove the problematic rule in its new competition law that requires foreign companies to obtain government approval for mergers and acquisitions, including those taking place outside the country. In a report submitted to the Congress, the US trade department has said it has taken up the issue with the Indian government to change the new regulation governing M&As under the amended Competition Act.

"The United States is working with industry, foreign governments, and Indian companies and industry groups to persuade the government to promulgate regulations under the new law to correct the most problematic aspects of the M&A provisions," the national trade estimate report 2008 has said. Read More.

The International Mergers & Acquisitions Review 2008 Will Provide A Far-Reaching Discussion And Analysis Of The Global M&A Market

March 27 - Business Wire - Research and Markets has announced the addition of “The International Mergers & Acquisitions Review 2008” to their offering.

The International Mergers & Acquisitions Review 2008 will provide a far-reaching discussion and analysis of the global M&A market, written by leading experts from investment banks, law firms and consultants. The next 12 months look like being eventful with several major M&A deals in the pipeline and increased activity returning to the sector.

The International Mergers & Acquisitions Review 2008 will provide the reader with a unique insight into the global M&A market by highlighting the opportunities as well as the pitfalls that face M&A practitioners in this ever changing dynamic arena. Read More.

Mining M&A activity hits new peak - 19th March 2008

March 19 - Platinum Today - PricewaterhouseCoopers' latest report shows that the level of mergers and acquisitions in the mining sector has reached "unprecedented levels".

According to the firm, the trend can be accounted for by the optimistic outlook for the industry in terms of growth and profitability, while high commodity prices are also a factor.

Indeed, the report noted that even the credit crunch would fail to slow deal activity down. Read More.

Many Middle Market Companies With Global Operations Have Found Success and Intend to Expand Overseas, KPMG Survey Finds

58 percent of US middle market execs surveyed plan to expand globally in next five years, with downturn in U.S. economy possibly accelerating rate of expansion

March 11 - PRNewswire - Overseas markets are proving fruitful for middle market companies and, facing a declining U.S. economy, many are intending to expand globally, according to a survey by KPMG LLP, the U.S. audit, tax and advisory firm.

KPMG's Global Enterprise Institute, dedicated to global middle market companies, surveyed 1,013 executives from middle market companies in 10 cities across the country in December and January to gauge success overseas, to assess plans for future expansion and to better understand key challenges and risks. In doing so, KPMG found that 58 percent of middle market executives plan to expand their global presence in the next five years, compared with 33 percent who expressed that they will maintain their current size. Read More.

Many Middle Market Companies With Global Operations Have Found Success and Intend to Expand Overseas, KPMG Survey Finds

March 11 - PRNewswire - Overseas markets are proving fruitful for middle market companies and, facing a declining U.S. economy, many are intending to expand globally, according to a survey by KPMG LLP, the U.S. audit, tax and advisory firm.

KPMG's Global Enterprise Institute, dedicated to global middle market companies, surveyed 1,013 executives from middle market companies in 10 cities across the country in December and January to gauge success overseas, to assess plans for future expansion and to better understand key challenges and risks. In doing so, KPMG found that 58 percent of middle market executives plan to expand their global presence in the next five years, compared with 33 percent who expressed that they will maintain their current size.

In addition, 41 percent of the surveyed executives felt that their company has been successful at achieving its global expansion objectives over the past two years, compared to 20 percent who indicated limited success. The global aspect of their business strategy was also expected to increase, with 39 percent indicating that global expansion is an integral part to their company's growth strategy. Read More.

RSM to conduct survey on SMEs

March 3 - The Star Online (Malaysia) - RSM Strategic Business Advisors Sdn Bhd plans to conduct a survey on Malaysian small and medium-sized enterprises (SMEs) and the middle market players by next month.

Executive director Girish Ramachandran said that having reported on the global front for middle enterprises, the local middle market enterprise survey was part of its efforts to create a value-added report in Malaysia.

“Our business strategy is to complement and drive the potential market growth of the local middle market enterprises,” he told StarBiz. Read More.

Cross-border M&As since 2002 to attract cap gains tax

March 1 - The Economic Times (India) - On the face of it, nothing seems to have changed for India Inc. Buoyant tax revenues and better compliance haven’t influenced the finance minister enough to prune the corporate tax rate, or even the surcharge. But, for overseas firms, acquiring companies in India just got costlier.

The FM may not have spelled it out in his speech, but the Budget fine-print reveals that the government has opened the doors for taxing cross-border deals. And that too with retrospective effect from June 2002.

The onus of paying capital gains tax on an acquisition in India will now rest with the buyer. The buyer is expected to deduct tax at source and failure to do so would leave him liable to pay the tax. Read More.

Lean year ahead for energy M&A

February 14 - FT.com - Mergers and acquisitions in the energy industry remained robust even during the financial turmoil in the second half of last year, but activity for some types of deal is likely to be weaker this year, according to a survey from PwC, the professional services firm.

Takeovers by companies from emerging markets such as China and India slowed last year and most of the biggest deals involved financial buyers or significant debt financing. Both of those factors are likely to be less evident this year because of tighter credit conditions, M&A advisers believe.

Michael Hurley, PwC’s UK head of energy, said: “It is going to be more difficult for some of the deals in downstream businesses, which are more linked to the economic cycle, to get away.” Read More.

Does the crunch mean M&A is dead and buried?

January 28 - Telegraph (U.K.) - Looking out of their windows across London's grey skyline, investment bankers are now wondering where their next deal will come from.

With both debt and equity markets in chaos, the start of 2008 is a far cry from the heady days of early 2007, when top financiers were cooking up bids for some of Britain's largest companies and confident management teams and private equity dealmakers were all too eager to press the red button.

As world stock markets tumbled at the beginning of last week, "uncertainty" had become the vogue word among the City's top dealmakers. That does not bode well for the mergers and acquisitions industry, which thrives on the confidence of company boards to sign off on a deal. Read More.

New BCG Survey-Based Report Highlights the Risks to Successful M&A in Rapidly Developing Economies -- and How to Overcome Them

January 25 - Boston Consulting Group - Companies making acquisitions in rapidly developing economies (RDEs) are twice as likely to generate superior shareholder returns -- at least initially -- as companies that make acquisitions in both developed and developing economies. But in order to succeed, companies need to be aware of four key risks before any transaction is completed, according to a new report by The Boston Consulting Group (BCG) -- "Eyes Wide Open: Managing the Risks of Acquisitions in Rapidly Developing Economies" -- which is based on a survey of executives with acquisitions experience in 30 RDEs.

These risks are a lack of information about the market and the target (cited as a significant challenge by 68 percent of executives in BCG's survey), regulatory pitfalls (63 percent), limited deal structure options (26 percent), and the complexities of dealing with the "softer" human and cultural issues in RDEs. Read More.