July M&A value dips 52.7% to $4.3 billion amid global trade tensions: Report

Corporate India announced merger and acquisition deals worth $4.3 billion in July, down by 52.74 percent compared to the year-ago period amid a subdued global growth and rising geopolitical tensions, a report said on August 19.

According to Grant Thornton's monthly M&A Dealtracker, as many as 39 deals worth $4.3 billion were reported in July against 49 transactions worth $9.1 billion in the year-ago period.

"Subdued global growth, the continued Brexit-related uncertainty and the rising geopolitical tensions roiling energy prices, affected the overall deal sentiment," the report noted.

The report noted that though M&A values declined more than half as compared to July 2018, the month recorded significant rise in the deal values as compared to the previous month (June 2019), demonstrating a revival in the deal sentiment among the deal makers.

"M&A transactions continued to witness a lackluster deal activity on the back of failing to record big ticket deals witnessed during July 2018. In addition, headwinds seen in the financial services space and slowdown in the core sectors have affected the M&A deal space," said Pankaj Chopda, Director, Grant Thornton India LLP.

Chopda further noted that emphasis of the Budget on the liquidity concerns in the NBFC sector, and constant efforts of streamlining the IBC norm, among others, are likely to boost the M&A deal activity.

"Though the Union Budget has laid down a roadmap for growing the economy in a sustained manner with a focus on both urban and rural sectors, the impact on deal activity will depend on the measures and policies by the government to counter the slowdown, implement/ promote growth-focused investment plans and impact of global economic trends," Chopda said.

The start-up sector not only led the pack for M&A both in terms of deal values and volumes, but also recorded the highest monthly values till date driven by OYO Rooms' $2 billion stake acquisition.

Retail, fin-tech, and gaming segments also remained active during the month.

The report further noted that the month of July witnessed deals pushed by IBC in the pharma sector with Dhanuka Laboratories-Orchid Pharma's $162 million deal and others in the pipeline across the retail sector with Patanjali-Soya Ruchi deal, and the manufacturing sector with Asian Colour-JSW steel deal.