By Santhosh V Perumal
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The Middle East and North Africa (Mena) witnessed almost tripling of domestic merger and acquisition (M&A) deals year-on-year to $3bn in the third quarter (Q3) 2013, indicating consolidation and uptick in the regional economies, according to Ernst and Young (E&Y).
The inbound deal value almost quadrupled y-o-y to QR3.9bn in Q3 this year, E&Y said in its ‘Q3 2013 Mena M&A’ update.
The total disclosed value of M&As in the Mena region rose 76% to $17.3bn in Q3 2013, while outbound disclosed deal value decreased by 9% to $5.2bn in Q3 2013. “The surge in both inbound and domestic deal values this quarter is a strong indication that the regional economy is picking up,” Phil Gandier, Mena Transaction Advisory Services Leader, E&Y, said.
Investors from both within and outside the region are recognising that the fundamentals for M&A in the Mena region are improving, which is strengthening buying intentions across the region and could create real momentum in the M&A market, he said.
Saudi Arabia was the target country of domestic deals in Mena with 13 deals, followed by the UAE with 12 deals, E&Y said, adding the target sector focus of announced domestic deals in the region in Q3 2013 was telecommunication, which represented 73% of the total value of all domestic deals.
This, according to E&Y, was largely due to the acquisition of Maroc Telecom by Emirates Telecommunications Company for $6bn.
The oil and gas sector had the highest number and value of inbound deals with seven deals worth $3.3bn comprising 82% of the total value of all Mena inbound deals.
The top deal in Q3 2013 was Emirates Telecommunications Company’s acquisition of Maroc Telecom in Morocco, representing 34% of the total deal value. The second biggest deal was the acquisition of Apache Corporation in Egypt by Sinopec International Petroleum Exploration and Production Corporation in China for $3.1bn, followed by the acquisition of Printemps in France by Divine Investments in Qatar for $2.1bn.
In the private equity space, 21 SWF (sovereign wealth fund)/PE deals were announced in Q3 2013, with September 2013 having the most activity with 10 deals followed by August with seven deals.
“Some element of M&A caution still exists, given the backdrop of the global economy and Mena geopolitical factors. However, there continues to be a growing corporate appetite in M&A activity due to the strong financial fundamentals of the region’s capital agenda as indicated by E&Y’s recent capital confidence barometer study,” Gandier said.