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RIL-RPL merger India's 10th largest M&A deal ever

The all-share merger deal valued at about Rs 8,500 crore between the two Mukesh Ambani group firms, RIL and RPL, has become probably the 10th-biggest ever for the country and the first billion-dollar deal this year.

As per the merger deal approved by the boards of Reliance Industries and Reliance Petroleum, shareholders will get one RIL share for every 16 RPL shares – resulting into issuance of 6.92 crore new shares by RIL.

The new RIL shares to be issued as part of the merger would be worth Rs 8,478 crore (about $1.69 billion) at the current market price.

RIL shares today dropped 3.15 per cent to Rs 1,225.15. This is the only billion-dollar M&A deal announced by an Indian entity so far this year. Prior to this, the biggest M&A deal for the year was Quippo Telecom's 49 per cent purchase in Tata Tele's telecom tower arm for 533 milllion dollar.

Besides, in 2008 also, there were only five deals valued more than the RIL-RPL merger, while in 2007 there were just four M&A deals worth over 1.7 billion dollars, involving Indian entities.

Among all the M&A deals struck by Indian entities ever, it would possibly be the 10th biggest one.

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 (six billion dollars), Ranbaxy's sale to Japan's Daiichi (4.5 billion dollars), ONGC-Imperial Energy (2.8 billion dollars), NTT DoCoMo-Tata Tele (2.7 billion dollars), HDFC Bank-Centurion Bank of Punjab (2.4 billion dollars), Tata Motors-Jaguar Land Rover (2.3 billion dollars) and Suzlon-RePower (1.7 billion dollars).

So far, M&A deals worth about four billion dollars are estimated to have been announced in 2009 so far, while in 2008 there were deals worth over 30 billion dollars.

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.

The past year also saw a significant plunge in M&A activities, with the deal value plummeting from over 68 billion dollars in 2007. The M&A street had peaked in 2007, after the value of all the deals in a year rising from 28 billion dollars in 2006 and 18.3 billion dollars in 2005.

Source: Economic Times

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