Slowdown Roils Deal Street: M&As Plunge 34.4% To $67 Billion
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Slowdown Roils Deal Street: M&As Plunge 34.4% To $67 Billion


The deepening slowdown has had its impact on the deal market in 2019 with mergers and acquisitions plummeting over 34 percent to $67.1 billion but still making it the second-best, on the back of the $6-billion ArcelorMittal takeover of Essar Steel, according to a report.

As per the report by Mergermarket, M&As in 2019 was the second-highest in value despite declining 34.4 percent in 2018, which was the best ever. But, the report is positive about 2020 as the government has eased foreign investment restrictions and plans to divest state-owned companies.

The report attributes the optimism to the relaxation in the foreign direct investment policy in August, loosening the restriction on coal and lignite mining, contract manufacturing, single-brand retail, and digital media, which may bring more opportunities to foreign investors.

"Overall M&As touched $67.1 billion across 422 deals, down 34.4 percent in value and 3.4 percent in volume compared to 2018 when the street saw 437 deals worth $102.2 billion," Mergermarket said in a note on Monday.

At $67.1 billion, India accounted for 10.4 percent of the deals in the Asia-Pacific region, said the report.

Of the total, inbound activities remained strong with $37.9 billion across 221 deals, while outbound deal value plunged 84.8 percent to a low of $2 billion across 54 deals, the lowest since 2014, when it was printed at $1.7 billion. The numbers would have much worse had it not been for the Essar Steel-ArcelorMittal-Nippon Steel deal worth $6 billion at the end of 2019.

The second biggest was the $3.65-billion deal involving a consortium led by Brookfield Infrastructure Partners taking over Tower Infrastructure Trust in July followed by the Bandhan Bank-Gruh Finance deal of $3 billion in January.

The fourth-biggest deal was Bhushan Power & Steel Ltd. takeover by JSW Steel for $2.74 billion in September, and the fifth was Reliance Industries' $2.45-billion deal with Pipeline Infrastructure Trust in March.

Private equity players continued to lead the deal street with buyouts reached record levels for two years in a row at $19.6 billion across 123 deals, surpassing the $17.6 billion involving 123 deals in the previous year.

Private equity exits, on the other hand, returned to a much more modest level at $7.9 million across 48 deals in 2019, following the all-time high in 2018 at $35.9 billion involving 59 deals.

With $8.3 billion deals across 79 activities, the U.S. remained the dominant foreign investor both in terms of deal value as well as deal count, followed by Canada at $7.9 billion across 12 transactions, on the back of two infra-related deals: Brookfield's $3.7 billion investment in Tower Infrastructure Trust and India Infrastructure Trust's $2.4 billion investment in Pipeline Infrastructure.

Meanwhile, deals from Japan jumped a whopping 189 percent to $3.5 billion across 23 deals in 2019 from $1.2 billion across 16 deals in 2018 and the Japanese investors are bullish on the country's logistics industry given the e-commerce boom.

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