Saudi’s material sector leads GCC M&A transactions during Q4 of 2019: Markaz
Financials, industrials record highest number of deals
KUWAIT CITY, Feb 22: Saudi’s material sector leads the GCC M&A transactions during Q4 2019 as per a report recently issued by the Investment Banking Department at Kuwait Financial Centre “Markaz”. The Saudi Arabian Fertilizers Company (“SAFCO”) closed the largest deal throughout the quarter through its acquisition of a fellow materials company, SABIC Agri-Nutrients Investment Company. SAFCO acquired 100% of the firm’s share capital for a total consideration of $1.2 billion.
The second largest transaction involves China’s State Grid Corporation’s intention to acquire a 49% stake in Oman Electricity Transmission for a total value of $1.0 billion. The next transaction involved Ripplewood Advisors, a US-based private equity firm, acquiring a 6% stake in Banque Saudi Fransi for a total consideration of $578 million. Following that, Saudi’s Investment Recycling Company fully acquired Global Environment Management Services, a local industrial waste management firm, for $453 million. The National Bank of Bahrain (“NBB”) announced its intention to acquire a 71% stake in Bahrain Islamic Bank (“BISB”) for $234 million. Based on the latest offer, NBB will acquire over 754 million shares of BISB at $0.3 per share or 0.167 NBB shares per BISB share.
GCC M&A Growth According to Markaz’ report, the number of closed M&A transactions in the GCC during Q4 2019 decreased by 8% compared to Q4 2018 however it increased by 63% quarter over quarter (“QoQ”). Among the region, the UAE reported the highest increase in the number of closed transactions QoQ, while Saudi Arabia recorded the highest increase compared to Q4 2018.
Acquirers and Targets A majority of the transactions completed during Q4 2019 and Q3 2019 were carried out by GCC acquirers. Of the total number of transactions closed during Q4 2019, GCC acquirers accounted for 71% while foreign acquirers accounted for 25%. The remaining 4% represents transactions for which the buyer information was not available. The market witnessed a similar pattern during the previous quarter in Q3 2019 as GCC acquirers accounted for 67% of the total number of closed transactions while foreign acquirers accounted for 30%.
Overall, a majority of the GCC acquirers preferred to acquire local companies as opposed to targeting foreign players. Aside from Bahrain, the remaining GCC acquirers only closed a minimum of one transaction outside of the GCC whereas UAE acquirers were active in both the local, regional and foreign markets. UAE acquirers reported a total of seven closed transactions that involved foreign targets. In addition, Qatari acquirers didn’t complete any transactions within their home country however, they completed transactions in the region and internationally.
Foreign Buyers In comparison to the previous quarter, the market attracted a higher level of interest from foreign buyers throughout the quarter. Overall, there was a total of 12 closed transactions, which is 33%
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