New Delhi: Clinched after months of long discussions, NRI billionaire Anil Agarwal-led Sterlite’s $1.7 billion Asarco buyout has joined the league of ten biggest ever Merger and Acquisitions (M&A) deal involving an Indian firm and the largest so far in 2009.
This is despite the deal size falling by almost $1 billion, from a projected estimate of $2.6 billion in May last year, due to devaluation of mining assets and a sharp fall in copper prices.
This weekend, the Indian arm of the London-based Vedanta Resources striked the deal to acquire America’s third largest copper producer Asarco LLC for $1.7 billion which will take its annual production capacity to 1.2 million tonnes in an year from the present six lakh tonnes.
It has pushed last week’s all-share merger deal between two Mukesh Ambani group firms, RIL and RPL, valued at about Rs8,500 crore ($1.68 billion), out of the ten largest ever M&A deals involving an Indian firm.
After RIL-RPL merger, Seterlite’s Asarco buyout is the only second billion-dollar M&A deal striked by any Indian entity so far this year.
“This acquisition is in line with our strategy of leveraging our existing skills to become a diversified global copper producer and creating long-term value for shareholders,” Sterlite chairman Anil Agarwal said.
Prior to the two deals, the biggest M&A deal for the year was Quippo Telecom’s 49% purchase in Tata Tele’s telecom tower arm for $533 million.
Besides, in 2008 also, there were only five deals valued more than the Sterlite-Asarco deal, while in 2007 there were just four M&A deals worth over $1.7 billion, involving Indian entities.
The biggest-ever deal involving an Indian company so far has been Tata Steel’s mega takeover of European steel major Corus for $12.2 billion, followed by British telecom giant Vodafone’s purchase of controlling stake in Indian mobile service provider Hutch Essar for about $10 billion.
Other M&A deals, bigger than RIL-RPL merger so far in the country, include Aditya Birla group company Hindalco’s Novellis acquisition ($6 billion), Ranbaxy’s sale to Japan’s Daiichi ($4.5 billion), ONGC-Imperial Energy ($2.8 billion), NTT DoCoMo-Tata Tele ($2.7 billion), HDFC Bank-Centurion Bank of Punjab ($2.4 billion), Tata Motors-Jaguar Land Rover ($2.3 billion) and Suzlon-RePower ($1.7 billion ).
So far, M&A deals worth about four billion dollars are estimated to have been announced in 2009, while in 2008 there were deals worth over $30 billion.
There has been a sharp plunge in the number as well as value of M&A deals in the recent past, reflecting the downturn in the overall economic scenario.