Mideast M&A deals dip in first quarter
UAE records highest announced deal value in the region at $5.1b
Merger and acquisition deals across the Middle East and North Africa (Mena) region declined sharply year-on-year, falling 21.8 per cent in the first quarter of 2018, according to EY’s first-quarter 2018 M&A report.
Mena M&A activity saw 93 announced deals, compared to 119 deals in the first quarter of 2017.
The total disclosed deal value also dropped by 26.7 per cent to $15.4 billion (Dh56.56 billion), compared to $21 billion in the same period last year.
The UAE saw the highest deal value with $5.1 billion from 23 deals.
The period saw inbound deal activity and value increase; however, both deal activity and value declined for outbound and domestic transactions.
The announced number of inbound deals stood at 27, up 42.1 per cent from the 19 deals announced in the first quarter 2017.
Inbound deal value increased by 138.7 per cent to $7.4 billion in the period, up from $3.1 billion year-on-year.
The number of outbound deals fell from 41 deals in the first quarter of 2017 to 29 deals in the same period in 2018, while outbound deal value fell 63.8 per cent.
The Mena region also saw a decline in domestic deals as they fell from 59 announced deals in the first quarter of 2017 to 37 deals in the first quarter of 2018, with domestic deal value falling by 28.2 per cent.
“Confidence in the economy remains strong, though Mena companies are taking a pause as rising inflation, market volatility, and high deal valuations ■ have businesses looking to preserve capital rather than deploy it in the short term. In particular, companies in Saudi Arabia and Egypt are taking a wait-and-see approach.
Last year, UAE companies dominated both inbound and outbound M&A activity and we expect the UAE to continue driving Mena deals in 2018,” said Phil Gandier, Mena Transaction Advisory Services Leader at EY.
The sector with the highest deal value was oil and gas with $7.2 billion. The chemicals sector followed with a deal value of $2.5 billion and the insurance sector had the third-highest deal value at $1.2 billion. Rounding out the top five sectors by deal value were provider care and technology, both with deal values of $1 billion.
“Although deal volume has been modest in the first quarter of 2018, deal values relating to acquisition capital deployed in Mena in [the first quarter of] 2018 have reached their highest levels since 2001, with $10.2 billion invested in the region. The insurance, medical and education sectors have seen the highest allocation of acquisition capital,” said Gandier.
Executives in the region are feeling optimistic about the Mena economy, with 98 per cent saying they see it as improving or stable, according to the latest EY Capital Confidence Barometer (CCB).