Middle East M&A activity falls in 2017

Middle East merger and acquisition (M&A) activity fell sharply in 2017 compared to the previous year, according to law firm Baker McKenzie.

In a fourth quarter report, the company said regional deal volumes were down 10 per cent compared to 2016, while deal values decreased 31 per cent.

This was despite a rally in the fourth quarter when volumes increased 8 per cent and aggregate values 21 per cent compared to Q3 to $6.6bn.

Similarly, cross-regional M&A increased 8 per cent and deal values 85 per cent from the third quarter, driven by the $1.06bn acquisition of Kuwait’s National Petroleum Services Co.

Baker McKenzie said the value of cross-regional deals targeting the Middle East was up 194 per cent to $1.9bn in Q4, from $630m the previous quarter, driven by the Natural Petroleum Services deal.

The UAE led the region for inbound deals with 15 of 31 valued at $516m, while Kuwait was the top target country by value with $1.2bn from three deals.

The US was the top bidding country by volume and value during the quarter, with six deals worth $1.2bn, and energy power was the most active sector with seven deals worth $1.3bn.

“We expect regional deal activity to remain fairly consistent in the coming years, with particular interest in the consumer-facing, infrastructure and technology sectors driven by the demand for innovation and new business models,” said Will Seivewright, corporate/M&A partner at Baker McKenzie Habib Al Mulla.

Outbound cross-regional M&A activity increased 52 per cent to $2.3bn from Q3 to Q4 but there were 10 per cent fewer deals (37).

The UAE was the top bidder country by both volume and value, with 19 of 37 deals originating from the region amounting to $1.07bn.

The top target countries for outbound M&A were the UK, US, Spain and Italy with three deals each. India was the top target country by value with two deals worth $1bn including the acquisition of the Indian unit of National Investment & Infrastructure Fund Ltd by the Abu Dhabi Investment Authority.

By sector, industry was the most active by volume and value with 10 deals worth $1.03bn.

Global deal activity remained almost flat in 2017 by value with 3 per cent growth in volumes.