UAE leads in regional M&A deals

The Middle East saw $2.4 billion worth of confirmed mergers and acquisition (M&A) deals in the four weeks between October 20 and November 18, 2010, according to M&A intelligence service provider Mergermarket.

The data, shared exclusively with Emirates 24|7, shows that deals involving UAE firms accounted for more than a third (36.66 per cent) of the overall deal-making activity during the past month.

Abu Dhabi-based Aabar Investments’ sale of a 3.22 per cent stake in Atlantia for a sum of €309.6m ($426m) to Italy’s Sintonia; and Waha Capital’s acquisition of a 20 per cent stake in Holland’s AerCap Holdings for $376m are among the Top 3 deals of the month.

The third UAE transaction involved entertainment, leisure and real estate operator Majid Al Futtaim Group, which acquired a 49 per cent stake in MAF Greater Union (which operates Cinestar cinema circuit) from Australia’s Amalgamated Holdings for Dh283m ($77.06m).

Financial services and real estate sectors have led the regional M&A sweepstakes this year, having witnessed year-to-date deals worth $3.13b and $3b, respectively.
M&A deal-making in the Middle East recovered last year by over 14 per cent after declining by more than 42 per cent in 2008 over 2007, when a record $27.5b worth of deals were registered in the region.

However, according to Mergermarket data, M&A deal-making in the region has amounted to under $12b for 2010 so far (until November 18), substantially lower than the over $18b that the region saw in M&A deals in 2009.

With just six weeks to go for the year to end, 2010, which started off on a positive note with almost $4b worth of deals in the first quarter itself, will likely end up being the worst year for regional M&A deal-making in five years.

Globally, on the other hand, announced deals for the first 10 months of the year amounted to $2.23 trillion, according to Thomson Reuters data, 12 per cent more than the $1.98tr worth of deals announced for the whole of 2009, and within striking distance of the $2.7tr announced in 2008, the year the credit crunch began.

According to the results of a Thomson Reuters & Freeman Consulting annual survey of companies worldwide, respondents expect global M&A to grow by 36 per cent to $3.04tr in 2011, driven by financials (forecast growth in M&A value over 2010: +75 per cent) and real estate (+88 per cent).

However, respondents expect the Middle East and Africa region to lag most other regions in M&A activity even in 2011, listing the region ahead of only Eastern Europe/Russia while ranking the seven most attractive regions for acquisition in 2011.

According to the survey, emerging Asia and North America are expected to see strongest M&A activity in 2011, followed by developed Asia, Latin America and Western Europe.