Flood of cross border deals takes April M&A tally to $4.4 billion

Out of the total $4.4 billion, the total value of outbound deals wherein Indian companies acquired businesses overseas in April was $1.91 billion through 21 deals and the total value of inbound deals was $2.28 billion (17 deals)

New Delhi: Foreign companies and their subsidiaries continued to remain bullish on Indian businesses, as inbound transactions worth $2.28 billion were announced in the month of April, taking the total merger and acquisition (M&A) deal value to a whopping $4.4 billion (around Rs19,800 crore), reports PTI.

According to global consultancy firm Grant Thornton, as many as 64 M&A deals worth $4.4 billion were announced in the month of April.

Out of the total $4.4 billion, the total value of outbound deals wherein Indian companies acquired businesses outside India in April was $1.91 billion through 21 deals and the total value of inbound deals was $2.28 billion (17 deals), the report added.

“We are seeing a flood of cross border deals in the market and they comprise almost 95% of the total value of M&A deals for April and 88% for the period January to April 2011. Inbound deals have picked up significantly over outbound,” Harish HV, partner, India Leadership Team at Grant Thornton India said.

The fears of the global recession have gone and corporates are back to looking for deals on a global platform, he added.

Domestic transactions have taken a back seat, as the total value of domestic deals in April this year was $0.21 billion via 26 deals as compared to $1.03 billion through 60 deals.

A sector-wise analysis shows that oil & gas was the most targeted sector accounting for 43% of the total deal value driven by Vedanta’s 11% stake acquisition in Cairn India from Petronas for $1.5 billion.

The other major deals include Genpact’s acquisition of Headstrong Corporation for $550 million, Essar Energy’s acquisition of Royal Dutch Shell’s Stanlow refinery in northwest England for $350 million and the Aditya Birla-Domsjo Fabriker buyout for $340 million.

The top five M&A deals accounted for 69% of the total M&A deal values, Grant Thornton said.

In the private equity segment, the deal values in the month of April amounted to $0.73 billion through (38 deals) as compared to $0.83 billion via 35 deals in the corresponding month last year.

“Private equity (PE) is growing in a steady manner and has touched a three-year high of $2.6 billion with an increase in deal numbers. PEs are looking at spreading themselves quite well by increasing number of transactions and hence average deal sizes have come down,” Mr Harish said.

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Jyothy Laboratories to acquire majority stake in Henkel India

Jyothy Laboratories had earlier acquired 14.9% stake in Henkel India from the Indian promoter Tamilnadu Petroproducts in March 2011

The board of directors of Jyothy Laboratories (JLL) has approved the buy-out of 50.97% stake in Henkel India (HIL) from Henkel AG & Co KGaA (Henkel AG). JLL had earlier acquired 14.9% stake in HIL from the Indian promoter Tamilnadu Petroproducts in March 2011.

In a deal structured by MAPE Advisory Group, JLL  proposes to acquire 59,360,203 equity shares, constituting 50.97% of Henkel India at a price of Rs20/share aggregating Rs118.7 crore.

JLL will refinance the existing debt of HIL as also buy out the redeemable cumulative preference shares in HIL held by Henkel AG. The aggregate debt owed by Henkel India to its lenders is approximately Rs454 crore. JLL will purchase 68 million preference shares in HIL from Henkel AG for Rs43.9 crore, subject to regulatory approvals. The per share equity consideration payable to Henkel AG is subject to customary closing adjustments based on the debt and cash position in HIL.

Further, JLL and Henkel AG have agreed that Henkel AG shall have an option to acquire up to 26% of the equity share capital of Jyothy Laboratories through primary and/or secondary transactions, after five years, subject to the terms and conditions to be mutually agreed.

This acquisition will trigger the mandatory 20% open offer to the public shareholders of HIL as per applicable SEBI regulations. MAPE Advisory Group will be the manager for the public offer.

Both JLL and HIL have strong synergies in various business segments, as both are present in home care, fabric care, dish wash, personal care and household cleaning segments and the acquisition will elevate JLL to amongst the top five FMCG players in India. With its array of well-known brands like Ujala, Exo and Maxo, JLL enjoys a dominant position in all its categories. With this acquisition, JLL will add to its stable internationally renowned brands like Henko, Pril, Fa & Mr White and popular Indian brands like Margo, Chek & Neem.

MP Ramachandran, chairman & managing director, JLL said: “This is a historic and much anticipated move from Jyothy Labs which will help us in strengthening our position in urban India. It will also give us access to any new product launches of Henkel AG & Co KGaA in the future.”

Shares of JLL were trading at around Rs221.90 on the Bombay Stock Exchange in the late afternoon, 0.07% down from the previous close.

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Hexaware declares 25% interim dividend

The record date is fixed as 28 May 2011 for determining the shareholders entitled for the interim dividend

Hexaware Technologies, a leading global provider of IT, BPO & consulting services, has announced 25% interim dividend.

Hexaware is a financially strong company with net cash balance in excess of $100 million. Accordingly the board of directors has declared a liberal dividend policy to reward its 84,000+ shareholders. Now, the company intends to distribute a high proportion of cash generated through operations as dividend.

Further, the board of directors declared an interim dividend of 0.50 paise per share (25%) on equity shares of Rs2 each. The record date is fixed as 28 May 2011 for determining the shareholders entitled for this interim dividend. This interim dividend shall be paid to the eligible shareholders on 3 June 2011.

The final dividend of Rs1.40 per share (70%) for CY2010 was approved at the annual general meet held on 27 April 2011 and has now been paid to all the entitled shareholders. The total dividend for 2010 was Rs2 per share (100%), excluding the special dividend of Rs1 per share (50%), up from Rs1.40 per share (70%) for the year 2009.

Last week, Hexaware reported strong performance for Q1 2011 with healthy revenue growth of 45% Y-o-Y and 5.8% Q-o-Q sequentially in dollar terms to $70.4 million exceeding the quarterly revenue guidance. During the previous quarter, there was an across the board margin expansion of 280 basis points in gross margins, EBIT margins expanding 310 basis points to 12.4% and profit after tax margins expanding 370 basis points to 16.9%. Further, the company upgraded its revenue outlook for 2011 to a minimum of $295 million, an annual revenue growth of at least 27.5% compared with 2010.

Shares of Hexaware were trading at around Rs67.75 on the Bombay Stock Exchange in the late afternoon, 2.42% up from the previous close.

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