Mergers & Acquisitions (M&A) deal volumes in the MENA region increased four per cent last year, from 401 in 2010 to 416 in 2011, according to a report by Ernst & Young. However, deal values fell by 28 per cent to $31.7 billion in 2011 from $44.1 billion in 2010.
The total deal value increased 64 per cent during the fourth quarter of the year compared to the third quarter, rising from $4.4 billion in Q3 2011 to $7.2 billion in Q4 2011.
“One of the key obstacles slowing deal closures has been the continuation of the valuations gap between buyers and sellers,” said Phil Gandier, MENA head of Transaction Advisory Services, Ernst & Young. “Once this discrepancy begins to narrow, we may begin to see deal closures picking up some pace.”
The UAE saw 49 deals-the largest number of domestic transactions last year, followed by Saudi Arabia with 44 deals.
In terms of volume, domestic transactions outnumbered inbound and outbound deal activity, comprising about 54 per cent of total deals.
“A drop in inbound deals directly correlates with the decreasing levels of FDI that the region is able to attract from global investors and institutions,” said Gandier. “This was to a large extent driven by the uncertainty caused by the changes in the region – especially in 2011. However, we expect this scenario to improve in 2012.”
The sectors that attracted the most domestic M&A activity in 2011 in terms of volume included Diversified Industrial Products (37 deals worth approximately $680 million) and Real Estate (28 deals worth $3.6 billion).