M&As at 8-month low in August due to drop in mega deals

Merger and acquisition (M&As) activity in August was the lowest in eight months in the country, with 33 deals aggregating to $0.6 billion. With a drop in mega deals, the average size decreased to $19 million from the $178 million in July.

The month recorded only six deals valued over $100 million each, compared to two billion-dollar deals and six valued at over $100 million each in August 2017, according to Grant Thornton India.

Even so, the current M&A environment is considered healthy. August had only two deals valued $50 million each, compared to five in August 2017.

Compared to July 2018, the month witnessed a significant drop, both in terms of deal values (by 93 per cent) and volumes (33 per cent). This was primarily due to no billiondollar deals. Also, July had seven transactions valued over $100 million each, compared to two in August.

Driven by Constellation Alpha Capital Corp’s acquisition of Medall Healthcare for $212 million, the health care sector led deal activity with 37 per cent of total M&A values. Followed by media & entertainment (22 per cent) and start-ups (19 per cent). The start-up sector accounted for 37 per cent of deal volumes.

Pankaj Chopda, Director, Grant Thornton India, said M&A transactions reported a 30 per cent decline in volume and value as compared to August 2017. Lack of conclusion on large-size transactions under the insolvency law and others impacted the report card. Pharmaceutical, health care & biotechnology, and media & entertainment sectors saw the largest activity.

BFSI, consumer & retailing, manufacturing, information technology & IT-enabled services, and pharma, health care & biotech are all expected to see deal activity. Lack of relief to power companies facing insolvency suits will drive M&A transactions in the sector.