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Ambani brothers lead the list of sour deals this year

business Updated: Sep 12, 2010 13:46 IST

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Placed among the wealthiest people globally, the Ambani brothers' groups also have the dubious distinction of accounting for over 90 per cent of the estimated USD 27 billion merger and acquisition deals that could not fructify so far this year, says a research report.

The biggest non-starter was Reliance Industries' USD 14.5 billion all-cash bid for acquiring a majority stake in bankrupt petrochemical group LyondellBasell Industries.

The mega deal collapsed in March after LyondellBasell termed Mukesh Ambani's RIL's proposal as undervalued.

Younger sibling Anil Ambani-led Reliance Communications' move to merge its telecom tower business with GTL Infra in a USD 10.8 billion also failed to take off.

According to the data compiled by research firm VCC Edge, as many as nine deals have been called off so far in 2010, together worth about USD 27 billion. Out of them, the deals from the stable of both the Ambanis that failed, alone accounted for a staggering USD 25 billion.

The two brothers are billed among the world's wealthiest people. In March this year, Forbes magazine had ranked Mukesh Ambani as the fourth richest person with a fortune of USD 29 billion while Anil Ambani, having wealth to the tune of USD 13.7 billion, cornered 36th position in the global ranking.

"The failure of the mega deals were primarily due to valuation concerns. Besides, management control issues and strategic unsuitability of these deals were another reason for the failure," SMC Capitals Equity Head Jagannathan Thunuguntla said.

RIL acquisition of LyondellBasell Industries could have been the largest overseas buyout ever made by an Indian firm. So far, Tata Steel's acquisition of Anglo Dutch steel producer Corus Group for USD 12 billion in 2007, is the biggest deal in the history of Indian corporate fraternity.

Meanwhile, RCom-GTL deal fell through earlier this month, despite both companies' entering into a non-binding term sheet for the transaction in June. In August, RIL forayed into the hospitality sector by picking up a 14.18 per cent stake in Oberoi group-promoted EIH Ltd.

This was the seventh major deal involving RIL this year. On the other hand, EIH in May saw the failure of its planned sale of around 17 per cent stake in the company to Max Hospital's founder Analjit Singh for about USD 272 million.