MENA M&A Values Drop 40%

The total value of mergers and acquisitions (M&As) announced in the Middle East and North Africa (MENA) region dropped by 40 per cent to $8.5 billion in the first quarter of the year from $14.1 billion in Q1 2011, according to a report by Ernst & Young.

However, the total deal value in Q1 2012 increased 18.1 per cent from the previous quarter, said the report.

Meanwhile the volume of M&A deals increased by seven per cent from 98 deals in Q1 2011 to 105 deals during the same period this year.

“A total of 19 sovereign wealth and private equity deals took place in Q1 2012, with ten deals in the month of March alone,” said Phil Gandier, MENA head of Transaction Advisory Services at Ernst & Young.

“This could mean that private equity players, who are usually the first movers in M&A, are taking comfort from upward revisions of regional economic growth projections and are gaining in transaction confidence,” he said.

The top two deals by value during the first quarter of the year were both worth $2 billion, said the report. These deals included Mubadala Development’s acquisition of Brazil’s Grupo EBX and Centurion Investment Company’s acquisition of India’s UAE Exchange & Financial Services.

The report also found that outbound deals comprised 64.7 per cent of all regional M&As.

“Regional investors continue to dominate the M&A market and continue on their path of large international investments for solid assets. This trend will continue going forward,” said Gandier.

Domestically, the UAE topped the region in terms of total value, signing deals worth $445 million. It was followed by Qatar and Saudi Arabia.

In terms of deal volume, the main domestic targets included the UAE with 13 deals, followed by Saudi Arabia and Egypt with seven deals each.