Mena deal value declines in first quarter

dubai — 2016 has gotten off to a fairly slow start in terms of Merger and Acquisitions activity targeting companies based in the Middle East and North Africa, or Mena.

Compared with Q4 2015, value has declined against a slight increase in volume, according to Zephyr, the M&A database published by Bureau van Dijk. In total, some $6,998 million was invested across 163 deals in Q1 2016, compared to the 161 deals worth $10,238 million announced in the final quarter of 2015. Despite the fairly low aggregate value figure, the result compares more favourably with the same period in previous years. If the last couple of years are any indication, many will be expecting to see an upturn in aggregate values throughout the rest of 2016.

The relatively disappointing value can be blamed on a lack of high value deals; only two transactions broke the all-important $1,000 million barrier between January and the end of March. Nevertheless, these deals did have a significant effect on overall dealmaking for the period. The top transaction is worth $2,029 million, representing 30 per cent of total

(2010-2015) 200 180 160 140 120 100 80 60 40 20 0 dealmaking for the quarter. It took the form of an 11 per cent stake sale in Kuwait-headquartered Al Safat Energy Holding Company by Danah Al Safat Foodstuff Company. This transaction was worth almost double the second placed deal, a $1,021 million acquisition of Moroccan cement manufacturer Holcim Maroc by Lafarge Ciments.

In all there were 12 deals worth more than $100 million announced in Q1 2016. The absence of more out-and-out “mega” deals has held values down over the three months as larger individual deals have a considerable effect on overall dealmaking for a period. For example, Q4 2015 had two significant announced deals, one of which was worth $3,200 million while the other was valued at $1,000 million. In Q3 2015 just one deal broke the $1,000 million barrier, but it was worth $8,000 million and accounted for a huge 76 per cent of overall value in the Mena region for the period (although a number of other international assets spanning various regions were also targeted as part of that deal).

It is clear that without these transactions, aggregate values for the respective timeframes would have been considerably lower.