M&As to cross 10,000 by 2008-09: Assocham

By agencies   |   Wednesday, 19 October 2005, 07:00 Hrs
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NEW DELHI: Ongoing economic resurgence and stability in global markets coupled with low interest rates will infuse sufficient confidence in corporates for increasing mergers and acquisitions (M&A) globally, according to the Associated Chambers of Commerce and Industry of India (Assocham).

The total number of mergers and acquisitions is expected to go up to over 10,000 with their transaction value exceeding $ 1,700 billion by 2008-09.

In a paper on 'Global Scenario on Mergers & Acquisitions', which is in the process of finalization by the chamber, it has been predicted that by the end of 2005-06, the total number of global M&A deals will rise to about 7,000, the business value of which are estimated to the tune of over $ 720 billion.

In the first half of 2005 alone, global cross-border deals for M&A are valued at $ 310 billion with 3,464 deals.

In 2004, the number of global M&A was 6,092 deals with estimated value of $ 536 billion.

Commenting on the basis of percentage-wise growth in the global M&A that have taken place between 2004 and 2005, Assocham President, Mahendra K Sanghi said it worked out to be within the range of 135 percent in value terms while in numbers, the growth rate has increased by 115 percent.

In the view of Assocham, similar trend of growth both in numbers and value terms will persist in the future because of economic resurgence and stability in the global markets with lower interest rates.

He said that during 2006-07, the M&A number will rise to 8,057 with their value further escalating to $ 970 billion.

By the end of 2007-08, the M&A deals will value at approximately $ 1,250 billion with the number of deals striking at about 9,250.

By 2008-09, however, the number of such deals will upsurge to 10,600 with their transaction value within the range of $ 1,700 billion.

Sanghi said that favorable borrowing conditions, benign exchange rates, improved inflation rates and growing management confidence will be key factors that will fuel the global M&A in the next 4-5 years. ''In our view, sectors which will witness massive M&A will include automobiles, engineering, BPO/KPO, banks and pharmaceuticals.''

The chamber is also of the view that increasing cutthroat competition among corporates to expand and acquire market space will force companies and corporates to speed up acquisition of business across the globe.

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