Kuwait: Saudi Arabia’s petrochemical sector leads the top GCC M&A transactions during Q4 2018 as per a report recently issued by the Investment Banking Department at Kuwait Financial Centre “Markaz”. The top reported deal value during Q4 2018 was $2.3 billion and involved the announced merger of Sahara Petrochemicals with Saudi International Petrochemical Company (SIPCHEM).
Zain Saudi has entered into a non-binding agreement to sell 8,100 of its tower network to IHS Holding for $648 million in an effort to reduce its debt obligations and focus on its core operations. Baker Hughes has acquired a minority stake in ADNOC Drilling for $550 million, marking the first time an international firm holds a direct stake in a UAE state-owned oil services business. Australia’s Webjet has acquired 100% of UAE’s Destinations of The World from Gulf Capital for $173 million. SABIC increased its stake in Saudi Methanol to 75% by acquiring an additional 25% stake for $150 million from Japan Saudi Arabia Methanol Company.
GCC M&A Growth
According to Markaz’ report, the number of closed M&A transactions in the GCC during Q4 2018 witnessed an 83% increase compared to Q4 2017 and Q3 2018. Among the region, Saudi Arabia reported the highest increase (in percentage terms) in the number of transactions in Q4 2018 compared to Q4 2017, while Bahrain was the only country among its GCC counterparts that did not witness any change in the number of transactions during the same period.
Acquirers and Targets
According to the report, GCC acquirers accounted for 75% of the total number of transactions during Q4 2018 and 69% during Q3 2018. Foreign acquirers accounted for 17% of the total number of transactions during Q4 2018 and 24% during Q3 2018. Buyer information was not available for 8% of the transactions in Q4 2018.
Each of the GCC acquirers seemed to have a different appetite with regards to M&A transactions during Q4 2018. Kuwaiti acquirers preferred investing in their home country and the greater GCC region. Saudi and UAE acquirers mostly invested in their home countries and outside the GCC region. Qatari and Omani acquirers preferred investing in their home countries. Bahraini acquirers only engaged in one transaction by acquiring a stake in a Saudi company.
Foreign Buyers
Q4 2018 witnessed a 50% increase in the number of completed transactions by foreign buyers compared to Q4 2017. In comparison to Q3 2018, the number of such transactions grew by 29%.
UAE targets represented 78% of the closed transactions by foreign acquirers during Q4 2018, while Qatar and Oman each represented 11% of the transactions during the same period. Bahraini, Kuwait and Saudi targets did not attract any foreign buyers during Q4 2018.
Sectorial View
The Financials, Consumer Discretionary, and Industrials sectors witnessed the highest number of transactions, collectively accounting for 59% of the total closed transactions during Q4 2018. The Energy, Healthcare, and Insurance sectors each accounted for 4% of the total closed transactions during Q4 2018; collectively amounting to 12% of the transactions during the period.
Deals Pipeline
There was a total of 11 announced transactions in the pipeline during Q4 2018; the same as the number of announced transactions during Q3 2018.
Saudi Arabia and Kuwait collectively accounted for 82% of the announced transactions during Q4 2018. Oman and Bahrain made up 18% of the announced transactions.
Top 5 M&A Deals by Reported Value* – Q4 2018
Target Company Target Country Buyer Buyer Country Percent Sought Deal Value (USD mn) Status
Sahara Petrochemical Saudi Arabia SIPCHEM Saudi Arabia 100 2,305 Announced
Zain Saudi’s 8,100 Tower Network Saudi Arabia IHS Holding Limited Mauritius 100 648 Announced
ADNOC Drilling United Arab Emirates Baker Hughes United States 5 550 Closed
Destinations of The World United Arab Emirates Webjet Australia 100 173 Closed
Saudi Methanol Company Saudi Arabia SABIC Saudi Arabia 25 150 Closed
Source: S&P Capital IQ, GCC Stock Exchanges, Local Newspapers, Markaz Analysis
*Top deals were chosen based on transactions which had all necessary information provided.
Number of Closed GCC M&A Transactions
Country Q4 2018 Q3 2018 Q4 2017 % Change
(Q3 2018)* % Change
(Q4 2017)*
Bahrain 1 3 1 -67% 0%
Kuwait 18 8 12 125% 50%
Oman 4 2 1 100% 300%
Qatar 3 0 1 N/A 200%
Saudi Arabia 7 2 1 250% 600%
United Arab Emirates 20 14 13 43% 54%
Total 53 29 29 83% 83%
Source: S&P Capital IQ, GCC Stock Exchanges, Local Newspapers, Markaz Analysis
* % changes are in comparison to Q4 2018.
Sector-wise Classification of Deals – Q4 2018
Sector GCC Acquirers Foreign Acquirers Other* Grand Total %
Financials 7 2 2 11 21
Consumer Discretionary 7 2 1 10 19
Industrials 9 0 1 10 19
Real Estate 6 1 0 7 13
Consumer Staples 4 1 0 5 9
Media 2 1 0 3 5
Energy 1 1 0 2 4
Healthcare 2 0 0 2 4
Insurance 1 1 0 2 4
Logistics 1 0 0 1 2
Grand Total 40 9 4 53 100
*Other refers to deals where buyer information is not available.
Geographical Distribution by Number of Announced Pipeline Transactions (Q4 2018)
-Ends-
About Kuwait Financial Centre “Markaz”
Established in 1974, Kuwait Financial Centre K.P.S.C “Markaz” is one of the leading asset management and investment banking institutions in the Region with total assets under management of over KD 1.06 billion as of 30 September 2018 (USD 3.51 billion). Markaz was listed on the Boursa Kuwait in 1997.
For further information, please contact:
Alrazi Y. Al-Budaiwi
Media & Communications Department
Kuwait Financial Centre K.P.S.C. "Markaz"
Tel: +965 2224 8000
Fax: +965 2246 7264
Email: abudaiwi@markaz.com
www.markaz.com
Disclaimer: The contents of this press release was provided from an external third party provider. This website is not responsible for, and does not control, such external content. This content is provided on an “as is” and “as available” basis and has not been edited in any way. Neither this website nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this press release.
The press release is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither this website nor our affiliates shall be liable for any errors or inaccuracies in the content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the information within this article is at your sole risk.
To the fullest extent permitted by applicable law, this website, its parent company, its subsidiaries, its affiliates and the respective shareholders, directors, officers, employees, agents, advertisers, content providers and licensors will not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, including without limitation, lost profits, lost savings and lost revenues, whether in negligence, tort, contract or any other theory of liability, even if the parties have been advised of the possibility or could have foreseen any such damages.
