Global economic uncertainty and the upshots of the Arab Spring continue to haunt deal activity targeting the Middle East, according to the Zephyr M&A database produced by Bureau van Dijk.
Data from Zephyr’s latest report for the month of November shows that transaction values fell for the third consecutive month in November 2011, and were 94 per cent lower than in November 2010. There were 18 transactions with Middle East-based targets worth a combined $35 million – the weakest result of the last 12 months, the report shows.
November’s largest deal – an announced acquisition of UAE-based Safewater Chemicals Company by Kuwait’s Alkout Industrial Projects Company – was worth just short of $16 million and was one of only two deals worth $10 million and over.
However, the region could be set for a major vote of confidence next month, with a report from Reuters suggesting US-based private equity house Carlyle Group is about to buy a significant stake in Saudi food group Al Jammaz.
Oman was the most frequently targeted country. There were nine transactions in November 2011 with target companies based in Oman – which was four-and-a-half times the level of deal activity recorded for the country just four weeks previously and three times the November 2010 level.
However, a UAE-based business was the target of the month’s largest deal by value and this ensured it was November’s most important country in monetary terms. Despite leading the Middle East, transaction value in the UAE declined more than 87 per cent year-on-year, from $129m in November 2010 to just $16m in November 2011.
There were two announced investments from outside the region: one from Norway and one from Japan. The involved parties were weather services company StormGeo, which agreed to buy UAE-based weather forecaster Met Consultancy for an undisclosed sum, and Nippon Steel Corporation, which also invested in the UAE. The Japanese metals group agreed to take on a minority stake in Al Ghurair Iron & Steel.