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2016 Looks A Strong Year for Mergers & Acquisitions
Apr 27, 2016


The first three months of 2016 has already seen a lot of activity as far as IPOs are concerned. But the buoyance does not stop there. If the first quarter of 2016 is anything to go by, mergers & acquisitions (M&A) activity in India could very well be robust for the full year too. As per an article in Livemint, the construction sector was the most active in terms of deal-making and accounted for 43% of the value of all the deals closed. This includes the cement sector and the big deals done by UltraTech Cement and Birla Corp. Both of them acquired cement capacities of Jaiprakash Associates and Reliance Cements respectively.

The consolidation in the cement sector is not surprising given a scenario of a supply glut and weak demand, all of which has taken a toll on the performance of cement players. There could very well be more such consolidation going forward too. In all in the construction space, seven transactions worth US$3.5 billion were announced in the first quarter compared to two deals worth US$266 million in the same period last year.

Transportation was another sector which attracted interest as eleven deals were made worth US$732 million during the first three months.

Of course, as the chart clearly shows, a strong first quarter does not necessarily ensure a very strong year. For instance, the first quarter of 2015 saw deals worth US$7.8 billion, much higher than the US$3.5 billion of 1Q2014. However, on a full year basis, 2014 emerged as the better year.

So it will be interesting to see if the M&A momentum in the first quarter of 2016 will carry on for the rest of the year as well.

This Chart Of The Day was published in The 5 Minute WrapUp - Monsoon and Patanjali Don't Influence Our Valuations of These Stocks

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