MENA M&A Deal Value Falls

The mergers and acquisitions (M&A) deal value announced in the MENA region dropped by 15% in the first half to US$18.5 billion, compared to US$21.7 billion announced in the same period last year, according to Ernst & Young. Compared to the previous quarter, the second quarter witnessed an increase of 85% in the total announced deal value which went up from US$6.5 billion to US$12 billion, the E&Y said in its report.

In terms of total number of deals, there was a 12% decline between quarters, from 76 deals in the first quarter to 67 deals in the second quarter, the report added. Phil Gandier, head of Transaction Advisory Services at Ernst & Young MENA, pointed out that fewer deals took place in the second quarter compared to first, but their value was significantly higher.

"Despite a decline in the number of deals in the past six quarters, the deal value has now increased to its second highest since the first quarter of 2009. Domestic and inbound deals have dropped in volume and value compared to second quarter, but outbound transactions have risen as regional investors increasingly invest overseas," he observed.

The countries that experienced a large degree of domestic activity in terms of number of transactions in the second quarter of 2010 were Kuwait (7 deals), followed by Jordan (5 deals) and Egypt, Saudi Arabia and the UAE (3 deals each).

Egypt ranked highest in the region in terms of deal value, comprising approximately 28% of the total disclosed deal value (US$624 million). Oman closely followed at 23% (US$525 million) and the UAE at 16% (US$372 million), the report said.

According to Gandier, domestic transactions by volume (number of deals), comprising 45% of total announced deals in second quarter outnumbered inbound and outbound deal activity, as was also the case in the second quarter of 2009.

The outbound deals held the greatest value among total announced deals, comprising US$9.1 billion or 76% of total announced deal value in the second quarter of 2010. Comparatively, in the second quarter of 2009, domestic deal activity saw the highest deal value, averaging at approximately 47% of total announced deal values, he added.

The sectors that attracted the most inbound deal activity in Q2 2010 were Diversified Industrial Products (3 deals) and Consumer Products (2 deals). The sector with the greatest inbound deal activity in the second quarter of 2010 in terms of deal value was mining, worth US$464 million, the E&Y report said. The other two sectors with the highest deal value in inbound deal transactions were Diversified Industrial Products (worth US$57.5 million) and Banking and Capital markets (worth $30 million), it added. - Trade Arabia