MENA Mergers & Acquisitions value doubles in Q1 2013 compared to Q1 2012

Dubai 24 April 2013
Disclosed MENA M&A deal values rose from US$7.3b in Q1 2012 to US$14.6b in Q1 2013
UAE and Qatar account for 76% of total disclosed domestic deal value in MENA

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According to EY’s MENA Mergers & Acquisitions update, the total value of disclosed mergers and acquisitions (M&As) in the Middle East and North Africa (MENA) region rose from US$7.3b in Q1 2012 to US$14.6b in Q1 2013, increasing by 100%. In Q1 2013, 98 deals were announced against 101 deals in the last year, a decline of 3%.
Phil Gandier, MENA Head of Transaction Advisory Services at EY MENA: “This increase can be attributed to growing investor confidence, improvement in the access to credit, relatively better convergence in pricing between investors and sellers and a hint of improved macro economic conditions. This is especially true of the markets and the sectors that saw the most deal activity – a trend that we expect to continue.”
UAE and Qatar account for 76% of total disclosed domestic deal value in MENA
The UAE topped the region in terms of total value of disclosed domestic deals, comprising approximately 54% (worth US$2.2b); followed by Qatar also at 21% (worth US$880.4m).
In the domestic space, the UAE also led the number of announced acquisitions with 11 deals. Saudi Arabia, Qatar and Kuwait followed with seven acquisitions each.
Top 10 deals account for 83% of all regional M&A
The top 10 deals in Q1 2013 were valued at US$12.1b which represented 83% of the total disclosed MENA M&A deal value. Of these, five are outbound (regional business buying international assets), three are domestic (regional business buying regional assets) and two are inbound (international business buying regional assets).
The top deal by value was worth US$6.4b, involving the acquisition of Orascom Telecom Holding S.A.E in Egypt by Baskindale Limited in Cyprus followed by the merger of UAE based Sorouh Real Estate PJSC and Aldar Properties PJSC for US$2b. These two deals comprised 69% of the top ten disclosed MENA M&A deals by value.
Inbound disclosed deal value sees exceptional growth
Inbound disclosed deal value increased from a negligible US$0.4b in Q1 2012 to US$7.2b in Q1 2013, much of which can be attributed to the announcement of Baskindale’s acquisition of Orascom Telecom in Egypt for US$6.4b.The domestic disclosed deal value grew significantly by 171% in Q1 2013 compared with Q1 2012, largely on account of the merger of Aldar Properties and Sorouh Real Estate valued at USD$2b; while the outbound disclosed deal value showed a decrease of 39%.
Banking & capital markets and telecom sectors lead announced deal activity
In MENA, attractive sectors were banking & capital markets, and professional firms & services which led deal activity with eight deals each, followed by oil & gas with seven deals, consumer products with six deals and real estate and telecom with four deals each. The sector with the largest disclosed deal value was telecom, representing US$7b.
For outbound announced deal activity, attractive sectors were telecommunications with five deals followed by real estate with four deals.
SWF/PE in the region
In the private equity space, 20 SWF/PE deals were announced in this quarter, out of 98 announced deals in Q1 2013 (20% of all announced deals). The 20 SWF/PE deals comprised US$1.6b of total disclosed deal value in 2013, with 40% of deals outbound.
“The coming months are likely to mirror how the rest of the year will stack up in terms of deal activity. There is increasing optimism globally with key deal drivers like corporate earnings, economic growth, and the quality and quantity of acquisition opportunities. This could bode well for outbound deals. However, according to our Capital Confidence Barometer that tracks market sentiments, the level of optimism is MENA is lower due partly to continued tensions in some regional countries. Although this could have a dampening effect on deal activity, we are starting to see regional investors factor these risks in, ring fence them, and complete transactions,” concluded Phil.