M&A activity increases in H1

Mergers and acquisition (M&A) activity increased in the Middle East and North Africa (Mena) region with the UAE leading in both volume and value in the first half of this year, according to Zawya.

First-half witnessed a total of 173 deals, an increase of 33 per cent over the 130 deals closed in the same period of 2010. In terms of total deal value, M&A activity increased 30 per cent, reaching $21.17 billion in H1 2011, compared to $16.26 billion in H1 2010.  The countries in this report include: the GCC and Levant countries, in addition to Egypt, Morocco, and Tunisia.

Tunisia witnessed the largest average deal value of $535 million in the first half of 2011, with four deals totalling $2.14 billion. In comparison, in H1 2010, Qatar recorded the highest average value per deal with $937 million from six deals valued at USD5.6 billion.

However, the UAE took the lead in terms of deal volume with 32 deals in H1 2011 compared to nine in 1H2010, resulting in a remarkable increase of 226 per cent. Targeted deal values in the UAE amounted to $2.07 billion in 1H2011, compared to $633.91 million in H1 2010, resulting in an increase of 226 per cent.

The UAE also secured the largest M&A transaction in H1 2011 worth $5.06 billion, when Abu Dhabi-based International Petroleum Investment Company acquired an incremental 48.9 per cent equity stake in Spain’s Compania Espanola de PetroleosSA. This eclipsed the largest deal of H1 2010, which was between Ezdan Real Estate Company and International Housing Company in Qatar, marking a $3.33 billion deal value.

One of the most prominent deals in H1 2011 was the cancellation of Emirates Telecommunications Company (etisalat) acquisition of a 46 per cent stake in Zain Kuwait for $12.09 billion, valued as the largest M&A deal in the region. The cancellation was primarily due to a lack of consensus between Zain shareholders.

Saudi Arabia saw the number of deals increase by 118.18 per cent from 11 in H1 2010 to 24 in H1 2011 reflecting a solid economy. Deal value in Saudi Arabia increased by 266 per cent from $467.2 million in H1 2010 to $1.71 billion in H1 2011. There were four external investors, with 20 regional and domestic players, clearly demonstrating a huge appetite within the region to invest in Saudi Arabia.

M&A activity also surged in non-GCC countries with Tunisia, Lebanon and Morocco being the main drivers. The total targeted value of M&A activity in the Mena region during H1 2011 reached $9.29 billion, out of which the GCC countries contributed 56 per cent for a total of $5.23 billion. Comparatively, H1 2010 logged $10.53 billion, from which the Gulf nations contributed $8.35 billion, or 79 per cent.

Across the Mena region, the sectors targeted by investors saw little change from H1 2010 to H1 2011. The financial services, industrial manufacturing and real estate sectors continue to dominate the charts in terms of deal volume in targeted sectors in both H1 2010 and H1 2011. In terms of deal value, oil and gas topped the charts, with $6 billion in H1 2011, compared to real estate’s $4.7 billion in H1 2010.

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