Mideast M&A activity dives 86% in first half

Reflecting the tight liquidity situation and an uninspiring financial environment, merger and acquisition (M&A) activity in the Middle East has registered a staggering decline of 86 per cent year-on-year.

According to data compiled by M&A intelligence service provider Mergermarket, the total value of Middle Eastern M&A deals announced in the first half of 2009 (until June 23, 2009) stands at $1.17 billion (Dh4.2bn) compared with $8.57bn announced in the corresponding period of 2008.

There has been a slight decline in the number and value of M&A deals in the region, with the second quarter of 2009 witnessing just 10 deals worth $578 million compared with 12 deals worth $595m in the first quarter of this year.

This compares poorly with first quarter of 2008 when 25 deals worth $7bn were announced in the region and to second quarter 2008 when 31 deals worth $1.5bn were announced. M&A tends to be a lagging indicator and it is likely that the rebound in the equity markets from the March 2009 lows and the economic green shoots will be followed by a spurt of deal-making.

Globally, M&A activity has witnessed a decline of 46 per cent in terms of value and 52 per cent in terms of volume, according to Mergermarket. There have been $673.2bn worth of merger and acquisition deals announced so far this year.

Deals announced so far in 2009 in the Middle East and Africa amount to just 1.1 per cent of the total global deals by value and two per cent by volume, the report said.

Large private equity deal flow remains virtually non-existent in 2009, so far. However, the level of interest shown by buy-out firms in Barclays' iShares as well as reports of buy-out interest in Anheuser Busch/InBev's eastern European assets, and Apollo Management's $538m joint bid with The Carlyle Group for BPP plc, all bode well for M&A in the second half of the year, said Mergermarket.

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