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Reeling from declining oil prices and an uncertain geopolitical climate, M&A deal activity in the Middle East and North Africa region dropped to just over eighty deals in Q1 2017. The region witnessed a significant decrease from the one hundred…

Reeling from declining oil prices and an uncertain geopolitical climate, M&A deal activity in the Middle East and North Africa region dropped to just over eighty deals in Q1 2017. The region witnessed a significant decrease from the one hundred and fifteen deals that were recorded in Q1 2016, according to EY’s Q1 2017 M&A report. Even so, overall deal value in the quarter did not see too drastic a difference compared to the previous year.

Deal activity in the Middle East has since been on the upswing over the second and third quarters of 2017, according to Baker McKenzie’s Cross-Border M&A Index. The region recorded a significant increase in deal value thanks to mega deals such as Tronox’s acquisition of Saudi Arabian chemical company Cristal. Baker McKenzie, in its Q3 2017 M&A report, observed that despite a twenty six percent decline in domestic deal volume in the Middle East, deal value increased by over five hundred percent compared to the previous quarter.

Bloomberg BNA reported that cross-border M&A deal activity across the globe accelerated at a record pace in 2017, and the Middle East was no exception. In the third quarter of this year, cross-border deals comprised seventy percent of the overall M&A deal activity in the region.  Earlier this year, JP Morgan’s M&A Global Outlook had predicted that cross-border transactions would be one of the key themes playing out in global M&A deals in 2017.

Over the first three quarters, outbound and domestic deal volumes showed some overall decline while inbound M&A deal activity climbed to an all-time high of $7.3 billion on the back of mega deals such as the Tronox-Cristal deal, Chinese stake acquisitions in Abu Dhabi’s giant onshore oil concession, and Amazon’s acquisition of Souq.  Chemical manufacturer Tronox acquired titanium dioxide producer Cristal, a subsidiary of Saudi Arabia’s chemical giant, Tasnee, in a deal worth $1.67 billion. Amazon paid $580 million in cash to acquire souq.com, entering the Middle Eastern e-commerce market earlier this year.

E&Y’s Global Capital Confidence Barometer has reported that fifty four percent of MENA companies are looking to close deals over the next year.  With economic conditions now improving, it is expected that more deals will be added to the pipeline and deal activity will continue to remain robust in the coming months.

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