Domestic deals drive 76% growth in MENA M&A activity

4102The value of merger and acquisition (M&A) deals in the Middle East and North Africa (Mena) region jumped 76 per cent to $17.3 billion in the third quarter this year from $9.9 billion in the same 2012 period, Ernst & Young said on Wednesday.

The value of disclosed inbound M&A deals in the region more than tripled to $3.9 billion in the third quarter from $1.1 billion in the corresponding 2012 period, EY said in its Mena M&A update.

The value of domestic deals increased by 170 per cent to $8.2 billion from $3 billion last year according to a report in the Khaleej Times.

Inbound deal value tripled to reach $3.9 billion, up by 254 per cent from $1.1 billion in the third quarter of 2012. However, outbound disclosed deal value dropped by nine per cent to $5.2 billion in 2013 third quarter from $5.7 billion in the same 2012 period.

“The surge in both inbound and domestic deal values this quarter is a strong indication that the regional economy is picking up,” said Phil Gandier, Mena transaction advisory services leader at EY.

He said 2013 third quarter saw the highest quarter deal values since 2008. “Investors from both within and outside the region are recognizing that the fundamentals for M&A in Mena are improving. This is strengthening buying intentions across the region and could create real momentum in the M&A market.”

Saudi Arabia and the UAE recorded the most number of domestic deals in the region at 13 and 12 respectively.

The telecommunications sector represented 73 per cent of the total value of all domestic deals while the oil and gas sector had the highest number and value of inbound deals worth $3.3 billion.

Etisalat’s acquisition of Maroc telecoms, which represented 34 per cent of the total deal value, was one of the top deals in 2013 third quarter. The second biggest deal was the acquisition of Apache Corporation in Egypt by Sinopec International in China for $3.1 billion.

Around 21 sovereign wealth fund and private equity deals were announced in the quarter, with September recording the highest deal activity this year.

Gandier said some element of M&A caution still existed given the backdrop of the global economy and Mena geopolitical factors.

“However, there continues to be a growing corporate appetite in M&A activity due to the strong financial fundamentals of the Mena region’s capital agenda as indicated by EY’s recent capital confidence barometer study,” he said.

The Middle East has been seeing a steady rise in deal activity throughout this year.

According to a Mergermarket report, the value of M&A activity in Africa and the Middle East reached $51.6 billion in the first three quarters of the year, matching the annual total of 2012.




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