Mergers and acquisitions (M&A) in the Middle East and North Africa doubled between 2017 and 2018, according to the latest report from EY, with Gulf-based investors the major players.

The total value of deals in the third quarter of 2018 was $10 billion, up from $4.9 billion in the same period of 2017. (Read the full report here).

Prominent regional players involved in more than two acquisitions during the quarter include the Bahrain-domiciled Investcorp, Investment Corporation of Dubai, Public Investment Fund of Saudi Arabia, United Arab Emirates-based Amanat Holdings and Dubai-based air services company Dnata.

The $1.6 billion acquisition of The Netherlands chemicals company Arlanxeo Holding by Saudi Aramco was the biggest deal of the quarter, according to EY.

Cross border deals dominated, worth $9 billion for the quarter, as opposed to $1.5 billion in 2017. Of the announced cross border activity, outbound deals increased from $1.5 billion in the third quarter of 2017 to $6.4 billion in 2018, and, inbound deals grew from $28.6 million to $2.6 billion in quarter three of 2018.

The statistics were published in a press release with EY’s Global Capital Confidence Barometer, published on Sunday, which gauges corporate confidence in the economic outlook, and identifies boardroom trends and practices in capital management agendas.

Phil Gandier, MENA Transaction Advisory Services Leader, EY, was quoted as saying: “Companies in the MENA are still following a cautious approach to deal making due to a modest growth in revenues and a drop in liquidity position, driven largely by ongoing regional market uncertainties, similar to last year.

“While deal values are higher than 2017, the results of the latest EY Capital Confidence Barometer (CCB) show that one-third (33 percent) of MENA companies expect to pursue M&A in the next 12 months, a 32-percentage-point drop from a year ago. In the coming year we may see subdued deal activity and values.”

EY said the number of high-ticket deals increased significantly in the third quarter, with eight of the deals announced valued at more than $500 million, compared to two in Q3 2017, leading to an overall increase in average deal size.

This is largely attributable to the increased participation of sovereign wealth funds and significant activity in the oil and gas and chemicals sectors in Q3 2018, the press release said.

Further reading:
• Middle East M&A deals hit eight year high - report 
• View from abroad: UAE dominates M&A deals closed in Q3, especially among foreign investors 
• Middle East mergers gain momentum through privatisation and regulatory reforms 
• UAE stays on top in M&A deals in Q3 
• dnata acquires majority stake in DUBZ 
• Investcorp looks to make direct investments in China, India 
• The Investment Corporation of Dubai announces the launch of ISS Global Forwarding 
• Amanat acquires Middlesex University in Dubai 
• Amanat acquires real estate assets of NLCS Dubai 

(Writing by Imogen Lillywhite; Editing by Shane McGinley)
(shane.mcginley@refinitiv.com)

Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article 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. Read our full disclaimer policy here.

© ZAWYA 2018