Mergers and acquisitions decline in Mena region

Deal values also declined by 17 per cent to $31.9 billion in the first half of 2017 in the Mena region, down from $38.9 billion during the same period of 2016.

MUSCAT: Mergers and acquisitions (M&As) in the Middle East and North Africa (Mena) region fell by 23 per cent to 192 deals in the first half of 2017, against 250 deals for the same period of 2016, according to a survey by Ernst & Young. Announced deal value also declined by 17 per cent to $31.9 billion in the first half of 2017 in the Mena region, down from $38.9 billion during the same period of 2016.

Out of the total deals in the first half of 2017, outbound deals ac- counted for the highest deal value reaching a total of $19.6 billion from 61 deals. Domestic deals generated the highest amount of activity in the first half of the year, with a volume of 93 deals and value of $5 billion. Inbound mergers and acquisitions activity reached a volume of 38 deals at a value of $7.3 billion. The Dubai Aerospace Enterprise acquisition of AWAS Aviation Capital Limited for $7.5 billion was the largest deal announced during the first half of 2017, the report noted.

“In the first half of 2017, 61 per cent of the acquisition capital was allocated outside Mena, making the region a net exporter of capital. We expect this trend to continue for the remainder of the year as investors continue to see more value and lower risk in nonMena markets,” said Phil Gandier, Mena Transaction Advisory Services Leader, EY.

The average deal value of inbound deals rose by 36 per cent and outbound value by 123 per cent in the first half of 2017 when compared with the first half of 2016. On the contrary, the average deal value of domestic deals witnessed a significant decrease of 74 per cent in the first half of 2017 when compared to the first half of 2016.

Second quarter

The second quarter of 2017 experienced an overall decline in the volume and value of deals when compared with the second quarter of 2016. Announced deal values in the second quarter of 2017 reached 80 at a value of $12.7 billion, reflecting a drop from the 135 deals worth $20.1 billion announced in the same period of 2016.

Out of the total deals in the first half of 2017, outbound deals accounted for the highest deal value reaching a total of $19.6 billion from 61 deals. Domestic deals generated the highest amount of activity in the first half of the year.

Oil and gas deals

Of the 192 deals that took place in the MENA region, the top 10 contributed over 76 per cent to the total deal value registered in the first half of 2017. Oil and gas was the top-performing sector by deal value, reaching $11.5 billion in the first half of 2017.

The airline industry followed with $7.5 billion, power and utilities deals were valued at a total of $3 billion, and the chemicals sector saw deals amounting to $2.2 billion in value.

The banking and capital markets industry, which accounted for $1.9 billion in deal value, was the fifth highest performing M&As sector in the first half of 2017. “There is significant deal activity in retail and consumer products, as well as oil and gas, and a secular shift in capital allocation to the ecommerce and technology sectors in Mena.

The market is loading up for a spate of deal announcements soon after summer,” said Anil Menon, Mena M&A and Equity Capital Markets Leader.