The overall merger & acquisition (M&A) activity took off from where it left after a revival in 2013 with a clutch of billion-dollar-plus deals. While multi-national companies (MNCs) increasing their holdings in India units through market route or indirect restructuring dominated the top M&A deals last year, the big trend for this year has been dominance of domestic deals.
Infrastructure came out prominently in the top deals charts besides other sectors such as pharma and banking.
Besides the top five, some other prominent deals include UltraTech’s proposed buyout of two units of Jaiprakash Associates for $853 million, Adani Ports and Special Economic Zone buying The Dhamra Port Co for $926.06 million and Emperador buying Whyte & Mackay from United Spirits for $729 million.
Here is a look at the top five M&A deals of the year.
Sun Pharma plans to buy Ranbaxy
Sun Pharmaceutical Industries Ltd, the country’s top drugmaker by market cap, proposes to acquire Ranbaxy Laboratories Ltd in an all-stock transaction, creating the world’s fifth-largest generics drug company and the largest pharma company in India by far. The deal has an equity value of $3.2 billion, which values Ranbaxy much lower than what Japan’s Daiichi Sankyo paid to buy a majority stake in the company from Malvinder & Shivinder Singh six years ago. The overall enterprise value is pegged at $4 billion. Daiichi Sankyo will become the second-largest shareholder of Sun Pharma with 9 per cent while Shangvi family who currently own 63.65 per cent will hold 54.7 per cent of the combined entity. For Daiichi Sankyo, the deal would take an albatross off its neck. Sun Pharma has a history of successful acquisitions and turning around mostly overseas acquisitions which could come handy in gulping down Ranbaxy. Ranbaxy would be its boldest bet yet. However, the deal is under the scanner of competition commission and there are expectations that the two firms would be required to sell some brands/assets before getting the final approval for a merger.
Kotak Mahindra Bank to buy ING Vysya
Kotak Mahindra Bank is acquiring ING Vysya through an all stock transaction worth over $2.4 billion, in the first significant M&A in the banking sector since 2010, when ICICI Bank snapped Bank of Rajasthan, and the second-biggest ever in the sector. With this, Kotak would consolidate its position as the fourth-largest private lender in the country, behind ICICI Bank, HDFC Bank and Axis Bank. ING Vysya shareholders will own approximately 15.2 per cent of the equity share capital of the merged Kotak. Dutch financial services major ING Group will become the largest non-promoter shareholder in Kotak post merger with an estimated holding of 6.47 per cent. Uday Kotak will own around 34 per cent of the combined entity. ING Vysya also counts several PE investors namely ChrysCapital, Norwest Venture Partners, ICICI Venture and PremjiInvest. ChrysCap, which has the single-biggest exposure among these, would hold 0.68 per cent of Kotak.
JSW Energy to buy key hydropower assets of Jaypee Group
Sajjan Jindal-led JSW Energy has agreed to acquire two of the three hydroelectric projects of Jaiprakash Power Ventures Ltd (JPVL) in Himachal Pradesh at an enterprise value of about Rs 9,700 crore (approximately $1.57 billion), in one of the biggest infrastructure M&A deals in the country to date. The deal, which involves transfer of 300 MW of Baspa II hydro-electric project and 1,091 MW Karcham Wangtoo hydro project, will make JSW Energy the largest private sector hydro-power generator in the country. Once the acquisition is completed, the aggregate installed power generation capacity of JSW Energy will enhance to 4,531 MW.
Previously Reliance Power and a separate consortium led by UAE’s Taqa and including IDFC Alternatives have seen their proposed deals to buy the same assets come unstuck. JSW Energy had stepped in a day after Reliance Power called off its proposed mega deal to buy all three operational hydro-power assets of JPVL.
Bharti selling telecom towers in Nigeria to American Tower Corp
NASDAQ-listed American Tower Corp has signed a definitive agreement to acquire Bharti Airtel Ltd’s over 4,800 communications towers in Nigeria for $1.05 billion. As per the agreement, Airtel will be the anchor tenant on the portfolio under a lease with a 10-year initial term. The agreement will help Airtel focus on its core business and customers, enable it to deleverage through debt reduction and will significantly reduce its on‐going capital expenditures on passive infrastructure in Nigeria. Bharti has inked four such deals this year. In July, it inked a deal to sell tower assets in four countries in Africa to Helios Towers Africa (HTA), a firm owned by a consortium of investors including Africa-focused PE firm Helios Investment Partners and International Finance Corporation (IFC). This deal covered 3,100 towers. Two months later it signed an agreement for the divestment of over 3,500 telecom towers spread across six African countries to Eaton Towers, an independent telecom tower company in Africa. Early this month, it also inked a deal with Nigeria-based telecommunications infrastructure group IHS Holding Limited to sell over 1,100 telecoms towers in Zambia and Rwanda. In total it may have offloaded tower assets worth $2.5 billion or more this year.
Adani Power buying Lanco’s Udupi unit
Adani Group has been fairly active in snapping assets this year and in particular its power unit has struck two significant deals. The larger of the two involved 3i-backed private power generator Adani Power buying Lanco Infratech’s 1,200 MW thermal plant in Udupi (Karnataka) at an enterprise value pegged at a little over Rs 6,000 crore or around $1 billion (when announced). As per the deal, Lanco will get around Rs 2,000 crore while the remaining Rs 4,000 crore debt would pass on to Adani Power. Lanco had put the asset on the block more than two years ago as part of its move to cut the huge debt pile on its books. Adani Power, which recently lost the race to buy two large hydro-power assets of Jaypee Group, got to sew one of the biggest M&A deals in the domestic thermal power space through this transaction. In another deal it is buying Avantha Power & Infrastructure Ltd’s 600 MW thermal power project Korba West Power Co Ltd for an enterprise value of Rs 4,200 crore ($680 million).