Indian takeovers of UK firms are on the rise

Wednesday, February 16, 2011 | Posted by: Fiona Cullinan
Categories: India | Tags: business, India, finance, investment, statistics, M&A, deals, IBR, South Asia, mergers and acquisitions, acquisition, Tata, Jaguar Land Rover

M&A statistics are showing a sharp increase in Indian takeovers in the UK last year, with Indian companies announcing 24 M&A deals targeting UK assets valued at £571 million.

The figures, from Grant Thornton’s International Business Report (IBR), also show that around 16% of privately held businesses in India plan to acquire businesses abroad in the next three years (up from 9% in 2009).

Anuj Chande, Head of South Asia Group at Grant Thornton UK LLP, says:

“There has been a staggering rebound of Indian takeovers of UK targets and acquisitive Indian companies will be further encouraged by reports that Jaguar Land Rover is making an astonishing recovery under the stewardship of Tata Motors.

“An increasing number of Indian companies are interested in acquiring UK assets, which are particularly attractive given that Pound Sterling hit a five-year-low against the Indian Rupee last May and continues to trade 18% below its five-year-high of INR 88.50. In January alone we have been approached by five acquisitive companies from India asking if we could find suitable targets in the UK.”

More key facts and figures*:

• The 24 M&A deals targeting UK assets valued at £571 million in 2010 shows an increase from nine M&A deals targeting UK assets worth £52.28 million in 2009.
• 41% of the 239 respondents from privately held businesses (PHBs) in India said that they plan to grow through acquisition in the next three years (up from 22% in 2009).
• Among Indian PHBs planning acquisitions, 40% expect to make acquisitions abroad (16.4% of all Indian respondents), while 78% of the acquisitive Indian PHBs were planning domestic acquisitions (31% of all Indian respondents).

Key drivers for acquisitions by Indian PHBs*:

• Build scale (55%, representing 23% of all Indian respondents).
• Acquire new technology or established brands (58%, representing 24% of all Indian respondents).
• Gain access to new geographic markets (64%, representing 26% of all Indian respondents).
• Gain access to lower cost operations (37%, representing 15% of all Indian respondents).

Anuj Chande added:

“The IBR results on M&A drivers for Indian firms tally with our experience on the ground. Grant Thornton advised India-based Elder Pharmaceutical Ltd on the acquisition of the remaining shares in AIM-listed NeutraHealth Plc. The takeover was designed to assist Elder Pharmaceuticals in entering into new European markets.”

You can read the story behind the Elder/NeutraHealth acquisition in our Story of the deal post, which covered the stages a business must go through for a deal of this type.

* Deal numbers and values are non-seasonally adjusted and based on announced deals, which offer the most current view of the M&A market (although not all of these deals will be finalised). Grant Thornton Corporate Finance analysed Thomson Reuters data on 11 February 2011.

If you are an Indian company looking to invest or list in the UK, Grant Thornton’s dedicated South Asia Group has the international capability, the cultural understanding and the partner commitment to help you drive your business forward. For further information and contacts, visit our South Asia Group page.

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