MENA M&A Deal Values Rise 42%, Volumes Fall 4% In 2012

Mergers and acquisitions (M&A) deal values in the Middle East and North Africa (MENA) region reached $44.8 billion in 2012, up 42 per cent compared to $31.6 billion in 2011, according to a new report by Ernst & Young.

Deal volumes however fell by four per cent to 398 in 2012 from 416 in 2011.

Phil Gandier, MENA head of Transaction Advisory Services, E&Y said: “The 42 per cent increase in announced deal values in 2012 suggest that there may be an improvement in the valuation gap amongst buyer and sellers in the market in comparison to last year where total deal values were considerably lower.

“Additionally, many businesses who restructured their capital back in 2011 left themselves well placed to finance and close deals in 2012.”

The countries that saw the largest number of announced acquisitions in 2012 were the UAE (77 deals), Qatar (48 deals), and Saudi Arabia (33 deals).

From an acquirer’s perspective, countries that ranked highest in terms of announced deal value were UAE at $13.5 billion, Qatar at $11.2 billion and Kuwait at $3.9 billion, said the report.

Outbound deals held the greatest value among total announced deals, comprising 43 per cent of the total in 2012 ($19.4 billion), compared to
$15.6 billion for domestic deals and $9.9 billion for inbound deals.

In terms of volumes, domestic transactions beat inbound and outbound deal activity, comprising 48 per cent of total deals in 2012.

“The increase that we’ve seen in deal values across all types of deals in 2012 highlights that the MENA markets still continue to remain attractive to global investors and institutions as they look to emerging markets as attractive regions for growth,” said Gandier.

In terms of sectors, telecommunications saw the highest value of inbound deals, at $3.3 billion, mainly due to France Telecom SA buying the Egyptian Company for Mobile Services.

For outbound deals, the real estate sector led in activity with 21 deals and the oil and gas sector was highest in terms of value at $5.7 billion.

Of the 398 deals announced in the MENA region last year, 71 deals, valued at $13.3 billion, were in the SWF/PE space.

“As 2013 unfolds there is an anticipation that the improvement in deal activity in 2012 will further improve as we start to see market conditions continually improving despite the unpredictable macroeconomic landscape,” Gandier added.