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Aditya Birla Group to acquire Terrace Bay Pulp Mill in North America

The Aditya Birla Group announced that it has signed an agreement in-principle to purchase the assets of the Terrace Bay Pulp Mill in North Western Ontario.  Says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group, “The acquisition of the Terrace Bay Mill and its subsequent conversion into a dissolving grade pulp mill is a major strategic move.  In the VSF business, we enjoy global leadership.  To sustain ongoing growth, we have an integrated business model, spanning the entire value chain from plantation to pulp to fibre.  The Terrance Bay Mill, upon conversion, will be geared to provide superior quality pulp for our VSF plants worldwide”.
 
The Terrace Bay Mill was placed under CCAA (Companies Creditors Arrangement Act) in January, 2012.  The Aditya Birla Group is to make this acquisition through a Special Purpose Vehicle (SPV), AV Terrace Bay Inc. (Canada).  Grasim Industries Ltd., proposes to hold a 40% stake in AV Terrace Bay Inc. and the remaining 60% is proposed to be held by Thai Rayon Public Co. Ltd., Thailand.  Over a period of the next 3 years, Grasim would be contributing $ 44 million, out of the total equity contribution of $ 110 million.

Marico plans to buy food product brands in South India: reports

Marico, makers of Parachute coconut oil and Saffola, is planning to acquire food product brands in South India,according to reports.

Reports stated that company has identified functional or health food as one of the segments of interest.

However, Marico had tasted little success with its salty baked snack Saffola Zest it launched in 2009, says report.

In Focus Stories

Quarterly M&A volume dropped 57.2% in Q2 2012:Thomson Reuters

INDIA 1H 2012 M&A:

The value of announced mergers & acquisition (M&A) deals involving India reached US$18.1 bn, a 34.8% decline from the first half of 2011 due to the absence of mega-transactions such as the Reliance-BP deal (US$9.0 bn) in early 2011.

Driven by adverse global and domestic factors, quarterly M&A volume this year dropped 57.2% during the second quarter of 2012 to US$5.4 bn from US$12.7 billion in the first quarter of 2012. The average M&A deal size for disclosed deals declined to US$76 mn year-to-date, as compared to US$91.9 mn in 1H 2011 as majority of India’s M&A transactions fell below US$1-billion.

Domestic M&A stands at US$7.0 bn, up 58.3% compared to the first half of 2011 (US$4.4 billion), the highest semi-annual start in deal value since 2010 (US$7.9 billion).

The bulk of the domestic activity focused on the Financials (29.5%), High Tech (18.5%) and Telecommunications (13.7%) sectors. Total cross-border deals in India amounted to US$10.5 billion, down 53.7% from US$22.6 bn during the first half of 2011.

Inbound BRIC M&A activity announced 829 deals worth US$39.7 billion, where India accounted for 20.3% (US$8.1 billion) losing 5.9 market share points compared to the first half of 2011. China saw the highest number of inbound deals among the BRIC nations but captured only 24.2% market share. Russia and Brazil lead the Inbound BRIC volume with 29.2% and 25.7% market share, respectively.

Materials Leads as Most Targeted Sector

The Materials sector dominated the industry breakdown accounting for 29.1% of Indian-involved acquisitions worth US$5.3 billion - up 35.7% from US$3.9 billion in 1H 2011 -  strengthened by the merger of Sesa Goa Ltd, a 55.1%-owned unit of Vedanta Resources, with Sterlite Industries (India) in a deal valued at US$3.9 billion, the largest deal in India this year. Concurrently, as part of Vedanta’s restructuring move, Vedanta Aluminum and Madras Aluminum will be consolidated into the new merged entity called Sesa Sterlite with a combined estimated value of US$4.1 billion. A significant rise in deal value is also witnessed in Media & Entertainment and Telecoms.

Private Equity-backed M&A in India Down 65%

Private Equity-backed M&A targeting Indian companies dropped 65.0% with 68 announced deals valued at US$1.4 billion from a strong start in 2011 (US$4.0 billion) . Quarterly volume declined 24.3% in the second quarter of 2012 to US$608.4 million from US$803.8 million during the first quarter of 2012.

Financials accounted for 33.1% with US$ 466.8 mn, down 69.1% from the comparable period last year.  The Healthcare sector witnessed a substantial increase this year pushing deal value to reach a record half-year volume of US$ 290.4 million.

India Inbound M&A Activity Slows Down 53%

With the absence of mega-transactions such as the US$9.0 billion Reliance-BP deal announced in February 2011, foreign firms acquiring domestic Indian businesses so far this year started slow with US$8.1 billion, down 53.2% from a robust start in 1H 2011 (US$17.2 billion). During second quarter of 2012, the value of inbound M&A deals dropped 68.0% to US$2.0 billion from last quarter’s US$6.1 billion.  The bulk of inbound acquisitions focused on the Materials sector capturing 52.5% with a triple-digit increase from the first half of 2011. Industrials saw the most number of M&A transactions with 29 deals, but witnessed an 83% decline in deal value (US$550 million) from 1H 2011.

United Kingdom accounted for the highest value of inbound acquisitions with 53.2% market share, or US$4.3 billion. Overtaking United States, Japan accounted for 14.6% with US$1.2 billion, an increase of 26.2% in value and 25% in number of deals from 1H 2011. Japan doubled its Indian acquisitions during the second quarter of 2012 to US$830.1 million from US$353.0 million in 1Q 2012.  United States, which had the most number of M&A transactions, captured 12.8% with 39 deals worth US$1.0 billion, down 67% from 1H 2011.

Indian Outbound M&A Activity Weakens

Indian acquisitions overseas decelerated this year as deal value amounted to US$2.4 billion, down 55.5% from the comparable period last year (US$5.4 billion).  Quarterly volume increased 91.8% during the second quarter of 2012 to US$1.6 billion from a slow start in the first quarter of 2012 which saw US$819.4 million worth of deals. Consumer Products and Services (31.1%) and Materials (27.9%) registered a combined market share of 59.0% from India’s outbound M&A activity.

Despite the slight 4.1% decline in deal value from 1H 2011, the United States accounted for 48.1% of India's outbound activity this year given at least four out of ten of the top outbound deals this year targeted the US with a cumulative deal value of US$1.1 billion.  The Piramal Healthcare’s acquisition of Decision Resources Group, a Burlington-based provider of research, advisory and consulting services, from Providence Equity Partners, for an estimated value of US$635 million was this year’s top outbound deal.

Thomson Reuters

Domestic News

SREI Infra buys US$72mn of Kingfisher Airlines debt

A debt fund managed by SREI Infrastructure Finance has bought about Rs4 bn worth of debt of Kingfisher Airlines from ICICI Bank, according to reports.

SREI's vice chairman Sunil Kanoria reportedly said that there was an opportunity because of the various securities package and returns which were coming along with it.

Triveni Engineering, Elecon Engineering shortlisted to acquire stake in Shanthi Gears: reports

Triveni Engineering, Elecon Engineering, Bharat Forge and a Belgian gear-box producer, have been shortlisted to acquire controlling stake in the Coimbatore-based Shanthi Gears, according to reports.

Reports stated that KPMG, which is advising promoters of Shanthi Gears on the stake sale, has drawn up a shortlist after receiving indicative bids.

Shanthi's chairman P Subramanian and his family is likely to take a final decision on selling their 44% stake in the next two weeks, says report.

Sheth Developers in talks with JM Financial to sell office space at Prabhadevi: reports

Sheth Developers is in talks with JM Financial and luxury carmaker Audi to sell part of its 8-storey office building Cnergy at Prabhadevi in Central Mumbai, according to reports.Reports stated that the size of the transaction could be over Rs. 4.20bn.As per the ongoing negotiations, JM Financial is expected to pay close to Rs. 3bn, while Audi will pay Rs. 1.20bn for its share of the space, says report.

There are reports that Audi is expected to occupy the ground floor of the building to set up its exclusive showroom.

Yatra.com to acquire 100% Stake in Travelguru.com

Yatra.com, India’s leading online travel company, today announced it has agreed to acquire a 100% stake in Travelguru from Travelocity Global. Travelguru will continue to operate as a separate entity under its existing brand name.  When completed, this acquisition will be Yatra.com’s fourth major acquisition in the last 18 months, following the purchase of TSI in October 2010, MagicRooms in June 2011 and Buzzintown in January, 2012.

The acquisition of Travelguru will strengthen Yatra.com’s position as the leading company in the Indian online travel space and substantially extend its position as the premiere aggregator and seller of domestic hotels and holidays in India, adding to its already strong offerings for flights and outbound holidays.

Travelguru is India’s largest hotel distribution network offering access to more than 6,500 hotels in India and 72,000 hotels worldwide. It offers travelers the opportunity to plan and purchase their travel in a transparent, easy and customizable manner with instant bookings and confirmations.

Essar Energy sells stake in Vietnam gas block to ENI

Essar Energy plc announced that its subsidiary Essar Exploration & Production Limited has agreed to sell a 50 per cent stake in Vietnam’s offshore gas exploration block 114 to ENI International B.V.

The reduction in Essar Energy’s stake in block 114, which was previously 100 per cent, is in line with the strategy for its exploration and production business of introducing strategic partners to help manage risk and of focusing on the development of its core assets.

Essar Energy  acquired the 100 per cent stake in block 114 in 2007 and a production sharing contract with the Vietnam Government became effective in 2010. Further investment is required to establish gas reserves in the block and no gas is being produced at present. Under the terms of the transaction, ENI is also assuming operator status for the block.

Ncubate Capital acquires stake in ‘Nevis Networks’

Ncubate Capital Partners (Ncubate), an early stage venture capital fund founded by Founder and Chairman of Luminous Power Technologies, Rakesh Malhotra, has closed its debut transaction by picking up a significant minority stake in Pune-based Nevis Networks (India) Pvt. Ltd. (Nevis), an emerging network security provider.
The funds raised from Ncubate will be used to finance product development and operations expansion across the globe. 

HCL Infosystems to acquire EDURIX Business

Serum Institute acquires Bilthoven Biologicals for Rs. 5.5bn

TTK Prestige plans acquisitions in Europe: reports

Global News

LSE acquires 5% stake in Delhi Stock Exchange: reports
London Stock Exchange has acquired five per cent stake in Delhi Stock Exchange (DSE) and aims to change the trading model, according to reports.
Reports stated that LSE’s interest in DSE emerges from the fact that volumes of exchanges in Bric(Brazil, India, Russia, China) nations are growing faster than their counterparts in developed countries.
The DSE was launched in 1947 shortly after India got independence from British rule, says report.

Dell to acquire Quest Software

Dell recently announced the formation of its Software Group to build upon its existing software expertise. The Dell Software Group will add to Dell’s enterprise solutions capability, accelerate strategic growth and further differentiate the company from competitors by increasing its solutions portfolio with Dell-owned intellectual property.

Quest’s family of software solutions and key technologies are strongly aligned with Dell’s software strategy. The acquisition provides critical components to expand Dell’s software capabilities in systems management, security, data protection and workspace management. In addition, Quest’s software portfolio is highly complementary to Dell’s scalable design approach to develop solutions that scale with customer needs.
BlackRock to buy Swiss Re's European PE arm: reports

U.S. investment manager BlackRock is planning to acquire Swiss Re's European private equity arm, according to reports.

Reports stated that Swiss Re's deal to sell its $7.5 bn private equity and infrastructure fund of funds business follows hot on the heels of HarbourVest Partners' agreement to buy Amsterdam-listed private equity fund of funds business Conversus Capital .
Both Swiss Re's private equity business and Conversus invest in private equity funds from firms such as Blackstone, CVC and KKR, says report.

Tokyo and Osaka exchanges get nod for merger: reports

A plan to merge Japan’s two biggest stock exchanges has won regulatory approval, according to reports.

The Tokyo Stock Exchange (TSE) reportedly said it had received a green light from Japan’s Fair Trade Commission for its planned takeover of the smaller Osaka Securities Exchange (OSE).

The deal was expected to be completed in August and the two bourses aimed to formally join their operations early next year, says report.

Bristol-Myers Squibb to acquire Amylin Pharmaceuticals

Ingram Micro to acquire Brightpoint for US$840mn

Linde to acquire Lincare Holdings for ~US$4.6bn

GKN plans to buy Volvo's aerospace division: reports