M&A activity reduces by 33% in the first quarter of 2019: Grant Thornton

Global conditions and uncertainty around impending Brexit led to a 33 percent decline in merger and acquisition deals in the first quarter of 2019 in value terms. A total of 110 M&A deals worth $12.5 billion were reported in the period, according to Grant Thornton.
 
"This drop (in value) can be attributed to delays in execution of deals, growing complexity in deal structures and macro-economic factors like upcoming elections, global economic conditions, and uncertainty around Brexit dampening investor sentiment,” the report said.
 
However, the quarter recorded a nominal increase in deal activity if compared to 2018Q4 due to encouraging factors such as progress in the Insolvency and Bankruptcy code related proceeding, drive in stressed asset space, cleaning of bad loans and divestments of non-core assets that have no synergies with larger group firms.
 
"Although we entered 2019 with substantially less momentum with 110 M&A deals worth $12.5 billion compared to 118 deals worth $18.7 billion in Q1 2018, some big deals announced this year have provided some encouragement that the outlook for M&A will be healthy despite a drop," Grant Thornton India Director Pankaj Chopda was quoted as saying by Livemint.
 
Arcelormittal’s acquisition of Essar Steel for $7.2 billion and Radiant Life Care’s merger with Max Healthcare for $1 billion were among the major announced deals during this period.
 
Chopda said that it is because of the companies looking to strengthen their market position and geographical expansion ambitions that is behind the M&A activity in the first quarter of the calendar year 2019.
 
"We expect to see an uptick in M&A deal activity across domestic, inbound and outbound segments spurred by action from financial services sector to minimise NPAs, and the US-China trade war being favourable in boosting India's manufacturing exports," he said.


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