Recent updates on Mergers & Acquisitions

India Inc strikes 480 merger and acquisition deals for $27.4 billion in 2013.

In recent times sweeping changes have been taking place in the emerging market economies (EMEs), i.e. Mergers & Acquisitions. Below there are certain instances of some M&As after the lull in M&A business due to sluggish economic trends and instability of the rupee against the dollar.

Due to the sluggish economic trends, merger and acquisition activities of Indian companies slowed down in 2013 to a total of nearly 500 deals worth close to $30 billion, but the momentum is set to pick up in the new year especially after the general elections in 2014.
According to Vikram Utamsingh, Managing Director, Transaction Advisory services, Alvarez & Marsal India, there are several insights to the M&A deal tally of this year.

Firstly, both global buyers and investors now believe that it is an opportune time to do deals in India as deals have become cheaper in dollar terms due to the sharp devaluation of the rupee against the US dollar.

Secondly, global investors believe that the Indian economy is at the bottom of its economic.

Thirdly, valuations in some sectors like industry and auto have reached more reasonable levels for deals to get done.

Lenovo-Motorola deal may raise espionage concerns

Google said it plans to sell its smart-phone business of Motorola Mobility for $2.91 billion to Lenovo, the Chinese technology company. But experts in Washington say the deal faces a key hurdle Wall Street may not be aware of: the Committee on Foreign Investment in the United States, a federal entity that has the authority to block any corporate transactions it decides are not in the nation’s interest.

Fiat at last buys Chrysler

In an unexpected deal on New Year’s Day, Italy’s Fiat and America’s United Auto Workers union (UAW) announced an agreement that will give the Italian carmaker complete control of its American ally, Chrysler.

The settlement is a personal victory for Sergio Marchionne, the chief executive of both Fiat and Chrysler, who had hoped to complete the merger of the two companies that was set in motion when Fiat helped pull Chrysler out of bankruptcy in 2009. In recent months there had been concerns that the transatlantic alliance might come apart if Mr Marchionne could not reach a deal with Chrysler’s minority stakeholder, the UAW’s retiree health-care fund, commonly known as VEBA.

Under the terms of yesterday’s agreement, Fiat will pay the UAW retiree fund $1.75 billion from its own bank account, and Chrysler will chip in another $1.9 billion. Chrysler also agreed to pay the VEBA an additional $700m in four $175m annual instalments after the merger has been completed.

GVK Bio acquires Aragen Bioscience Inc.

Asia’s leading small-molecule contract research organization (CRO), GVK BIO, and Aragen Bioscience, Inc., a privately held US based, pre-clinical CRO specializing in high-value biologics services, announce an agreement through which GVK BIO will acquire the capital stock of Aragen Bioscience. GVK BIO has established itself as a pre-eminent small molecule service provider. This deal enables GVK BIO to expand its service offering to a broader base of organizations and gives GVK BIO expertise in biologics services and a significant US presence. The acquisition provides Aragen with the ability to expand its service offerings, access to GVK BIO’s global sales force and access to new markets.

Google purchased Deep Mind Technologies of UK

Google purchased the British start-up Deep Mind Technologies – an artificial intelligence company – on 27 January 2014. The American tech giant Google confirmed the deal in its London office. This deal represents Google’s biggest ever single acquisition in Europe.

The acquisition of Deep Mind would prove to be helpful for Google in further developing its most recent Hummingbird search update. The Hummingbird search update was created to make Google more human and searches which can now understand context like a human brain.

Facebook acquired Little Eye Labs for 90 crore rupees

Facebook acquired Bengaluru-based Little Eye Labs for 90 crore rupees on 7 January 2014. It has become the first Indian and the third Asian company to be acquired by Facebook. Facebook is the world’s largest social networking site. Little Eye Labs, a company that develops a tool to helps Android app developers to measure, analyse and optimise Facebook apps. The acquisition is expected to help the overall mobile strategy of Facebook with a technology that could help track and improve the performance of Facebook Apps. This is one of the most high profile acquisitions involving an Indian product start-up.

CCI approved Acquisition of Cement Plants of Jaypee in Gujarat by UltraTech

The Competition Commission of India (CCI) on 23 December 2013 approved the proposed acquisition of the cement plants of Jaypee Cement Corporation Limited in Gujarat by Ultratech Cement Limited (Ultratech). As per the order, UltraTech will make acquisition of an integrated cement unit at Sewagram and grinding unit at Wanakbori in Gujarat. Ultratech and Jaypee both are engaged in manufacture and marketing of different varieties of cement across India. The combined capacity of Sewagram and Wanakbori plants is 4.8 MTPA.

The commission made an opinion with reference to its order passed on 20 December 2013 that the proposed combination will not have an appreciable adverse effect on the competition in India. Thus it approved the proposed combination under the sub-section (1) of the Section 31 of the Act.