M & A in the CSE & across biz
The Colombo Stock Exchange (CSE) is expected to see an increase in strategic share deals, mergers, and acquisitions (M&A) activity, and outright sales across various industries in the coming months.
Analysts predict that larger parcels in listed Blue-chip firms will change hands, with a combination of local and foreign buyers. An analyst told the Business Times that in a depressed market where valuations are low, M&A activities are on the rise with strategic steaks changing hands.
“More substantial stakes in possibly blue-chip counters will change hands.” The buyers of those holdings will be a combination of both locals and foreigners, he added.
The insurance sector is particularly attractive to global players, and analysts forecast increased consolidation in this industry. Another analyst said that at least two insurance firms are for sale, while many foreign and local buyers are setting the stage for consolidation in this sector.
Now there are opportunistic buyers and eager sellers, another industry analyst agreed noting that experienced buyers are leaping at openings, fueling mergers and mostly acquisition activity among these two parties. Private sector hospitals are facing high fixed costs due to the country’s economic crisis, prompting some to consider mergers and acquisitions.
High fixed costs prompted by the worst-ever economic crisis the country has faced, certain private sector hospitals up for mergers and acquisitions, analysts say.
All private sector hospitals are facing this issue, they said noting that the high fixed costs with the interest rate hikes etc. are making things difficult for them.
Manufacturing firms are also receiving interest from both local and foreign buyers who are looking to capitalise on the low stock market and low interest rates.
“We have seen continued buying interest from companies with cash and those who have access to low-interest debt; especially those looking to use this opportunity to consolidate within their sectors. “Many are starting to do strategic revenue growth deals similar to their core acquisition strategy,” an analyst said.
A strong reality check has sent certain businesses re-evaluating their trades, and firms are now pricing themselves correctly, according to some businessmen. This means they have gauged the correct value for their companies, which has resulted in them seeing the ‘true’ future of the businesses.
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