Saudi leads mergers and acquisitions’ value in MENA

The value of disclosed inbound merger and acquisition (M&A) deals in Middle East and North Africa region more than tripled to $3.9 billion in the third quarter from $1.1 billion last year, according to the MENA M&A update from Ernst & Young (EY) for the third quarter of 2013.

The domestic deal value increased by 170 percent to $8.2 billion from $3 billion last year, the report said.

The total disclosed value of M&As in the region rose 76 percent from $9.9 billion in third quarter of 2012 to $17.3 billion this year. However, the outbound disclosed deal value decreased by 9 percent from $5.7 billion in the third quarter of 2012 to $5.2 billion.

Saudi Arabia led as the target country of domestic deals in the region with 13 deals, followed by the UAE with 12 deals, stated the report.

Phil Gandier, the MENA transaction advisory services leader, EY, said: “The surge in both inbound and domestic deal values this quarter is a strong indication that the regional economy is picking up. This quarter saw the highest third quarter deal values since 2008.”

“Investors from both within and outside the region are recognizing that the fundamentals for M&A in MENA region are improving. This is strengthening buying intentions across the region and could create real momentum in the M&A market,” he added.

The target sector focus of announced domestic deals in the region during the third quarter was telecommunications, representing 73 percent of the total value of all domestic deals.

This was largely due to the acquisition of Maroc Telecom by Emirates Telecommunications Company for $6 billion. The oil and gas sector had the highest number and value of inbound deals with 7 deals worth $3.3 billion comprising 82 percent of the total value of all MENA inbound deals.

Telecommunications Company’s acquisition of Maroc Telecom in Morocco which represented 34 percent of the total deal value in the third quarter, said the report.

The second biggest deal was the acquisition of Apache Corporation in Egypt by Sinopec International Petroleum Exploration and Production Corporation in China for $3.1 billion, followed by the acquisition of Printemps in France by Divine Investments in Qatar for $2.1 billion.

Out of the top 10 deals in third quarter 2013, four were domestic and outbound, and two were inbound, according to E&Y Mena M&A update.

In the private equity space, 21 SWF/PE deals were announced in third quarter 2013, with September 2013 having the most activity with 10 deals followed by August with 7 deals, it stated.

“Some element of M&A caution still exists 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 region’s capital agenda as indicated by EY’s recent Capital Confidence Barometer study,” Gandier added.

This article was first published in the Saudi Gazette.