M&A deal values in the Middle East plunged by 51% in 2020

Merger, acquisition activity set to pick up this year as economies bounce back

Financial stock exchange market display screen board on the street. Image used for illustrative purpose.

Financial stock exchange market display screen board on the street. Image used for illustrative purpose.

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Merger and acquisition (M&A) deals across the Middle East slowed down in 2020 on the back of the unprecedented global crisis induced by the coronavirus pandemic, new data showed.

From June to December last year, companies made 220 M&A deals, down two percent from 225 in the same period in 2019, according to the latest report by global law firm Baker McKenzie. For the whole year, a total of 423 M&A deals were reached, down by 13 percent from 2019.

In terms of value, 2020 also performed poorly, with total M&A deals for the whole year posting a 51 percent decline to $58.7 billion, compared to 2019. However, there was an uptick towards the end of the year, particularly in November 2020, when deal volumes and values surged to 52 deals at $4 billion, up 56 percent from November 2019.

“2020 has been quite a challenging year to say the least. [In that year] we have witnessed smaller deals dominate the M&A market which is expected given the current economic uncertainty and global market disruption caused by the COVID-19 pandemic,” said Omar Momany, partner and head of the corporate M&A practice group at Baker McKenzie Habib Al Mulla based in Dubai.

However, he noted that there is still interest in the region, particularly in certain sectors.

“The megadeals we’ve  seen in some sectors such as high technology, financial institutions, energy and power and real estate have shown that there is interest in the region and we can potentially expect to have more activity as the region and the world more generally begin to bounce back from the COVID-19 pandemic,” said Al Mulla.

A similar trend was observed worldwide, with global M&A deal values for the full year posting a 6 percent decline to $3.6 trillion from 2019. Volumes also fell three percent to 25,053.

Middle East M&A deals

According to Baker McKenzie, the majority of deals in the region for the second half of last year were cross-border in nature, as organisations were looking to achieve business synergies amid a raging pandemic.

Total domestic deals for the year amounted to 137, with a combined value of $27 billion, showing a huge decline of 169 deals and $80.6 billion when compared to 2019 figures.

Cross-border transactions for the full year also dropped significantly to 286 deals worth $31.7 billion, compared to 320 deals worth $38.7 billion in 2019.

In terms of cross-regional deal volumes, the figures for the full year also declined to 264 from 295, although values increased slightly from $29.6 billion to $31.17 billion.

(Reporting by Cleofe Maceda; editing by Seban Scaria)


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