High interest rates and commodity prices have not prevented multi-billion dollar deals in India and M&A activity has been able to sustain momentum, according to Grant Thornton. In its half-yearly Dealtracker report, the global accountancy firm says M&A and PE deals in the first half of 2008 increased to a total value of $24.62 billion, up from $19.4 billion in the second half of 2007. (more…)

Tags: acquisitions, Indian Stock Market, megers

UK banking giant Standard Chartered on Tuesday announced it will acquire US-based American Express Bank for about $860 million — a deal that will give it the much-needed additional branch licences in India. The acquisition would be an all-cash deal, StanChart said in a statement. It is likely to increase the bank’s network in India to a total of 90 branches.
Immediately after the announcement, industry sources said the development would have no impact on American Express’ credit card business, which it plans to pursue aggressively across the world including India. StanChart said the American Express Bank’s acquisition from American Express Company would be for a total cash consideration equal to the net asset value of AEB at completion plus $300 million in cash. As of June 30, this would have amounted to about $860 million, it said.
AEB, whose New York-based parent company AXP is the third-largest credit card network, is a leading international bank present in 47 countries, including India. Among other benefits, “the acquisition will include valuable branch licences in India and Taiwan subject to regulatory approvals,” StanChart said.
According to the data released by Reserve Bank of India, Standard Chartered is the largest foreign bank in India in terms of branches with a total of 81 branches, as against American Express Bank’s seven branches as of September 2006 out of total 258 branches of 29 foreign banks. Since then, Standard Chartered has got approval for two more branches in India, which the bank plans to open next month, a bank spokesperson said from Mumbai. Standard Chartered said it expects to further deepen its existing network and expand its access to new growth markets through this acquisition.

Tags: acquisitions, standard charted

Reliance Industries Limited (RIL) has acquired a majority stake and management control of Gulf Africa Petroleum Corporation (Gapco), a company which has a significant presence in East Africa in the petroleum downstream sector. The acquisition has been made through a wholly owned subsidiary, Reliance Industries Middle East, Dmcc (RIME) a company registered in united Arab Emirates, the company said on Tuesday.
Gapco, an entity based in East and Central Africa with headquarters in Mauritius, owns and operates large storage terminalling facilities and a retail distribution network in several countries including Tanzania, Uganda, Kenya. It also owns and operates large storage terminals in Dar-Es-Salaam (Tanzania), Mombassa (Kenya) and Kampala (Uganda) and has other well spread depots in East and Central Africa. It also operates more than 250 outlets covering retail and industrial segments.
The company said it considers its acquisition of Gapco as “strategic” and a step towards achieving its global vision in the petroleum downstream sector by integrating the entire value chain consisting of refining, shipping, trading, terminalling and marketing through retail and wholesale segments. This will help Reliance establish a natural marketing outlet for its refinery products.
“The East African countries, where Gapco operates, have demonstrated rapid economic growth and have progressive government policies in place. Import of petroleum products in these countries is rising and has mirrored the rapid GDP growth. It is also expected to rise further in the near future. Further, these markets are easily accessible from India.”
RIL owns and operates the world’s largest greenfield refinery at Jamnagar on the west coast of India and is setting up another similar sized export-oriented refinery at the same location through Reliance Petroleum Limited (RPL).

Tags: acquisitions

Mumbai-based Elder Pharmaceutical Ltd has announced the acquisition of 51 per cent stake in Biomeda Group of Bulgaria at an investment of 5 million euros. Biomeda Group is one of the top ten manufacturers and distributors of oral dosage pharmaceutical formulations and has an annual turnover of 12 million euros. Biomeda is Elder’s second acquisition in less than 45 days. Earlier, Elder bought a 20 per cent stake of London-based NeutraHealth plc through the subscription of shares worth about Rs 47 crores.
Elder Pharmaceutical Ltd director Alok Saxena said, “Elder got attracted to the Bulgarian market because of the skilled labour force. Also, Bulgaria has an advantage in terms of lower labour cost compared to other European countries. Being a member of the European Union, the patent rules in Bulgaria are in line with EU standards.”

Tags: acquisitions, elder Pharma

Aug. 20: The United Kingdom has emerged as a prime location on India Inc’s global acquisition map with deals worth $1.2 billion taking place in the first six months of this year, a report says. British firms, on the other hand, have also intensified their hunt for businesses in India and have already entered into acquisition deals worth $12.9 billion.
“The UK is set to be the number one acquirer of Indian businesses and also the prime acquisition target for Indian companies this year, and there is still a huge untapped potential in the subcontinent that UK firms are missing out on,” a report by global financial adviser Grant Thornton said. The acquisitions made by UK firms here have witnessed a jump of over 41 fold over last year’s deals valuing $310 million, while those entered into by Indian businesses in the UK has risen three-fold, the report said.
“Strong historical ties between the UK and India combined with the rapid growth experienced by the Indian economy had led to some very large deals, although there was still underlying weaknesses in the overall picture,” Mr Anuj Chande, International Business Partner and head of Grant Thornton’s South Asia Group said. This year, so far, Indian firms valuing more than $14.5 billion were acquired by overseas buyers through 78 deals. Of this, UK-based Vodafone stole the show with the $10.9-billion acquisition of Essar from Hutchison Telecommunications International.
Barring this deal, the value of UK acquisitions is spread over a total of three deals. In the first six months this year, Indian firms have spent as much as $1.2 billion on UK-based companies against $332 million invested on acquisitions in the US, the report showed.
Over 119 international acquisitions were completed in 2006 by domestic firms, which have already made 63 deals in the first six months of the current year. Of these 63, seven were acquisition in the UK. The lion’s share of India’s acquisition in the UK is of spirits giant UB Group which paid almost one billion dollars for Scotch whisky distiller Whyte & Mackay. This year’s international acquisition patterns have so far favoured raw materials, while the Essar deal in telecom sector led in terms of value.

Tags: acquisitions, UK