Deal-breakers: Value of M&A deals down by over half, with construction down 95% in 2017

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Image used for illustrative purpose. United Arab Emirates, Dubai, cranes.

Image used for illustrative purpose. United Arab Emirates, Dubai, cranes.

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The value of merger and acquisition (M&A) deals in the Middle East and North Africa (MENA) declined by more than half last year, despite the number of transactions remaining relatively stable, according to data released on Monday.

Last year saw the announcement of 126 deals worth approximately $16 billion, compared to 129 deals in worth $37.8 billion in 2016, according to data from business intelligence firm Mergermarket.

The decline in value represented a year-on-year drop of 57.67 percent. (Read the full report here).

The MENA figures ran counter to a global upward trend seen thisyear, with the first three months of 2018 showing one of the strongest global quarters for M&A activity, according to Thomson Reuters data released last week.

The value of global M&A deals in the first quarter of 2018 totalled $1.2 trillion, a year-on-year increase of 67 percent, despite the number of transactions dropping by 10 percent to 10,338, Reuters reported.

M&A volumes doubled in Europe in the first quarter, while the United States was up 67 percent and Asia was up 11 percent, Reuters reported.

The best performing sector for M&A deals in the MENA region last year was the financial services sector with 16 deals worth $4.5 billion, followed by industrials and chemicals with 13 deals valued at $3.9 billion and telecommunications with seven deals valued at $3.2 billion.

Some of the biggest transactions in the region last year included the $2.2 billion deal between Tronox and The National Titanium Dioxide Company, Kingdom Holding Company’s $1.5 billion investment into Banque Saudi Fransi and the 12.1 percent stake acquired in Kuwait's Mobile Telecommunications Company (Zain) by Oman Telecommunications Company for $1.4 billion.

The quietest sector for M&A transactions last year was construction, with the number of deals in the sector down from $1.3 billion in 2016 to just $59 million in 2017. Other low performing sectors included transport and technology.

“The M&A market in MENA is showing real signs of strength in 2018, with a flurry of big-ticket deals already announced this year," Jonathan Klonowski, Europe, Middle East and Asia research editor at Mergermarket, was quoted as saying in a press release accompanying the report. "Greater stability in commodity markets and a need to innovate should put corporates in a position to be active throughout 2018.”

Further reading:
MENA M&A deal value drops 57.6% in 2017 - report
UAE leads charge in Middle East M&A rally during Q4
Global mergers and acquisitions reach record high in Q1
Gulf region's construction contractor awards estimated to be worth $1487bln in 2018 - Ventures Onsite report

(Writing by Shane McGinley; Editing by Michael Fahy)
(shane.mcginley@thomsonreuters.com)

Our Standards: The Thomson Reuters Trust Principles


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