M&A Deal Values In MENA Up 100% In Q1

The total value of disclosed mergers and acquisitions (M&As) in the Middle East and North Africa (MENA) region rose 100 per cent to $14.6 billion in the first quarter of 2013, up from $7.3 billion in Q1 2012, according to a new report by Ernst & Young.

However, the number of deals fell three per cent to 98 during the period.

The top 10 deals in Q1 2013 were valued at $12.1 billion, representing 83 per cent of the total values. The biggest deal was worth $6.4 billion, involving the acquisition of Orascom Telecom Holding in Egypt by Baskindale Limited in Cyprus. The merger of Abu Dhabi-based developers Sorouh Real Estate and Aldar Properties, valued at $2 billion, came next.

Phil Gandier, MENA head of Transaction Advisory Services at Ernst & Young MENA said: “This increase [in deal values] can be attributed to growing investor confidence, improvement in the access to credit, relatively better convergence in pricing between investors and sellers and a hint of improved macro economic conditions.”

The UAE topped the region in terms of total value of domestic deals ($2.2 billion), followed by Qatar ($880.4 million). The UAE also led the number of announced acquisitions with 11 deals, while Saudi Arabia, Qatar and Kuwait followed with seven acquisitions each.

In terms of sectors for inbound activity, banking & capital markets and professional firms & services led with eight deals each, followed by oil & gas with seven deals, consumer products with six deals and real estate and telecom with four deals each.

Telecoms led in terms of deal values, amounting to $7 billion.

For outbound deal activity, attractive sectors were telecommunications with five deals followed by real estate with four deals, said E&Y.

“The coming months are likely to mirror how the rest of the year will stack up in terms of deal activity,” said Gandier.

“There is increasing optimism globally with key deal drivers like corporate earnings, economic growth, and the quality and quantity of acquisition opportunities. This could bode well for outbound deals.

“However, according to our Capital Confidence Barometer that tracks market sentiments, the level of optimism is MENA is lower due partly to continued tensions in some regional countries. Although this could have a dampening effect on deal activity, we are starting to see regional investors factor these risks in, ring fence them, and complete transactions,” he added.