M&A jumps 25% in 2014 to reach a record of $37 bn

Healthcare sector captured highest volume in the deals

Overall deal activities hit near record-high in 2014 with the value of announced mergers & acquisitions involving domestic companies reaching $37 billion, a full 25.5 per cent jump over 2013.

This is a little short of the record level of $37.6 billion worth deals closed in 2011.
The average M&A deal size for transactions climbed up to $79.1 million in 2014 compared to $67.6 million in 2013 as more deals were announced valued above $500 million, according to Thomson Reuters/ Freeman Consulting data.

However, total cross-board M&As dropped a massive 39.2 per cent to $13.9 billion compared to 2013 as both inbound and outbound activities declined.

Inbound M&As fell 27.2 per cent, while outbound deals plunged 65 per cent. Completed M&As involving domestic companies totalled $25.7 billion, a 12.8 per cent decline over $29.4 billion in 2013. Domestic deals stood at $17.4 billion, up 245.7 per cent over a year ago-boosted by three deals above $1-billion, including Sun Pharma's pending acquisition of Ranbaxy Labs for $4.1 billion in a stock swap transaction.

This deal pushed the healthcare sector to capture 26.1 per cent of domestic activity, while on excluding the Sun-Ranbaxy deal, healthcare captured 17.2 per cent market share with a value of $6.4 billion, up 24.6 per cent from 2013, which is the highest since 2010 when it stood at $7.2 billion.

The technology, media, and telecoms sector came in second with an aggregate market share of 18.5 per cent as combined deal value rose 15.8 per cent to $6.9 billion from 2013.

The energy & power sector followed next with 16.7 per cent of the market share with $6.2 billion worth of deals, down 8.9 per cent from 2013.

Private equity-backed M&As rose 36.3 per cent in the reporting year at $3.4 billion, making it the highest annual period since 2011 when it stood at $4.6 billion.

This was driven by Canada Pension Plan Investment’s acquisition of Kotak Mahindra Bank from Kotak Trustee Co. for a total value of $371.5 million.In addition, Canada Pension Plan Investment also agreed to acquire an undisclosed minority stake in L&T Infrastructure Development Projects from L&T for $322.2 million in a privately negotiated transaction.

However, inbound M&As were down 27.2 per cent to $11.3 billion in 2014, despite an 11.5 per cent increase in number of announced deals.

Most of inbound deals were on consumer staples sector with deal value of $2.4 billion, despite a 35.7 per cent fall over 2013, capturing 21.5 per cent of all inbound deals followed by healthcare and energy & power with 13.2 and 12.6 per cent market share, respectively.