• Home
• News Article

Middle East mergers plunge 59% to 76 deals worth $6.5b

Wednesday, Jun 16, 2010

Gulf News

Dubai Mergers and acquisitions (M&A) deal values in the Middle East and North Africa (Mena) region dropped by 59 per cent to $6.5 billion (Dh23 billion) in the first quarter of 2010 compared to $15.8 billion in the same period last year, according to data compiled by Ernst & Yong.

The total number of M&A deals announced in the Mena region fell 16 per cent from 91 in the first quarter of last year to 76 in the first quarter this year. Compared to the fourth quarter of last year, the number of deals increased from 70 to 76 and the valued increased by 30 per cent from $5 billion to $6.5 billion.

In terms of size, the UAE's International Petroleum Investment Company 's acquisition of a 5.2 per cent stake in Barclays for $1.94 billion was the largest deal in the first quarter of this year. The second largest deal was Barwa Real Estate Company 's acquisition of the entire share capital of Qatar Real Estate Investment Company for $862 million.

Egypt, Saudi Arabia, Qatar and Jordan were the most active in terms of the number of transactions. Egypt reported 10 deals, followed by Saudi Arabia, Qatar and Jordan.

Ernst & Young expects Egypt to continue to lead the region.

"The M&A activity levels in Egypt reflect the potential and great vibrancy within its economy, which will continue to be maintained in the coming quarters," said Phil Gandier, Head of Transaction Advisory Services at Ernst & Young Middle East.

In terms of the total disclosed deal value in the region, Qatar attracted 39 per cent of M&A activity with deals valued at $1.08 billion, followed by Lebanon with $450 million and Saudi Arabia with $381.4 million.

Saudi Arabia was the largest recipient of M&A fund inflows with approximately 35 per cent ($102 million) of total inbound deals value going to it, closely followed by Lebanon ($100 million) and Oman ($49.3 million).

According to a recent survey of 27 investment banks by Zawya.com M&A activity for the Gulf region is expected to surpass the $25 billion mark this year.

"The M&A sector now has an air of cautious optimism as key corporates' first quarter earnings show a return to double digit growth and chief executives are now seeking growth through acquisition strategies," said Jean Marc Paufique, Head of the Professional Investment Division of Zawya

Last week the $10.7 billion deal between India's Bharti Airtel and Kuwait's Zain for the latter's Africa services was concluded.

In terms of disclosed deal value in the first quarter, banking and capital markets ($916.2 million) was the most sought-after sector in the Mena region, followed by real estate ($887 million) and asset management ($383.2 million).

"The region is traditionally known for the predominance of financial and real estate companies in M&A activity. Industrial and core sectors remain contenders for either government divestment or global expansion," said Gandier.

By Babu Das Augustine

© Gulf News 2010. All rights reserved.