2018 proved to be a robust year for mergers and acquisitions for Indian corporations. Powered by the Insolvency and Bankruptcy Code and an extremely competitive atmosphere in the mobile and e-commerce space, dealmaking crossed $100 billion for the first time ever.
As the government pushed for resolutions, there was a wave of consolidation in sectors most affected by the build-up in non-performing loans such as financial services, energy, and steel. There was also movement in the consumer goods and e-commerce space as foreign companies stepped in to benefit from India’s massive customer base.
Some of the largest deals for 2018 were:
–> Walmart announced plans to acquire a 77% stake in India’s Flipkart for $16 billion in May 2018. The deal also included $2 billion of fresh equity funding to support Flipkart’s expansion plans. This was the country’s largest acquisition and the world’s biggest purchase of an e-commerce company.
–>In August 2018, U.K.-based Vodafone’s Indian subsidiary and homegrown Idea Cellular received the final approval for their merger from the National Company Law Tribunal. The deal, which has been in the works since last year, will create India’s largest telecom operator by subscribers (430 million) and revenue market share (37%). Vodafone will own a 45% stake in the combined entity.
–>In January 2018, state-owned Oil and Natural Gas Corporation Ltd., announced the acquisition of a 51% stake in Hindustan Petroleum Corporation Limited in a deal aimed at helping the federal government meet its disinvestment target for 2017-18. The former spent over $5 billion on the purchase of a majority stake in the state-backed refiner, with most of this amount being funded through loans.
–> In May 2018, Mumbai headquartered Tata Steel acquired bankrupt rival Bhushan Steel in an auction. The $4.9 billion offer for a 73% stake in Bhushan Steel was approved by the National Company Law Tribunal. The merger will help Tata Steel make inroads into the automotive steel industry, which was dominated by Bhushan Steel.
–> In December, Hindustan Unilever Ltd., the Indian subsidiary of consumer good giant Unilever, purchased GlaxoSmithKline’s iconic nutrition brands Horlicks and Boost. The all-stock $4.5 billion deal makes Hindustan Unilever India’s largest publicly-listed food and refreshments company. The transaction is expected to be completed in one year subject to regulatory and shareholder approvals.
–>In September 2018, India’s Finance Minister, Arun Jaitley, announced the consolidation of Bank of Baroda, Vijaya Bank, and Dena Bank. The merged entity will become the third-largest bank in India with nearly 9,500 branches.
–>In July 2018, Mumbai headquartered UPL Ltd, a maker of crop protection and agrochemical products, acquired Arysta LifeScience Inc., the farm pesticides business of West Palm Beach FL-based Platform Specialty Products Corp., for $4.2 billion in an all-cash deal. The combined entity is slated to be the fifth-largest agrochemical company in the world.
The trend is expected to extend into 2019. As internet penetration increases, consumer goods companies may experience an unprecedented level of deal activity as consolidation happens.
