MENA M&A value drops 40% in Q1 2012

26/04/2012 22:18 AST

The total value of mergers and acquisitions (M&As) in the Middle East and North Africa (MENA) region dropped by 40 percent to $8.5 billion in Q1 2012 from $14.1 billion in Q1 2011, Ernst & Young said Wednesday in its MENA Mergers & Acquisitions update.

The total M&A deal value ($8.5 billion) in the first quarter of this year jumped by 181 percent compared to the previous quarter (Q4 2011) which saw announced deals worth $7.2 billion.

The volume of announced M&A deals increased by seven percent, from 98 deals in Q1 2011 to 105 deals in Q1 2012. Average announced deal size was down 34.7 per cent, from $372.1 million in Q1 2011 to $242.9 million in Q1 2012.

Phil Gandier, MENA Head of Transaction Advisory Services at Ernst & Young, said "we are still seeing a level of caution in the regional markets. Overall, the positive news from the 2012 Q1 M&A numbers is that the start of this year has been better in comparison to the start of 2011."

"A total of 19 sovereign wealth and private equity deals took place in Q1 2012, with 10 deals in the month of March alone. This could mean that private equity players, who are usually the first movers in M&A, are taking comfort from upward revisions of regional economic growth projections and are gaining in transaction confidence," he added.

UAE, Qatar and Saudi Arabia account for 78 percent of total announced domestic deal value in MENA. UAE topped the region in terms of total value, comprising approximately 29 percent of total domestic disclosed deal value at $445 million; followed by Qatar also at 29 percent of total domestic deal value at $439.6 million; and Saudi Arabia at third position with 20 percent of deal values worth $304 million.

In terms of deal volume in Q1 2012, the main countries targeted for domestic deal activity in MENA include the UAE with 13 deals, followed by Saudi Arabia and Egypt with seven deals each.

The top 10 deals in Q1 2012 are valued at $7.27 billion or 85.5 per cent of the total regional M&A deal value. Of these, five are outbound (regional business buying international assets), three are domestic (regional business buying regional assets) and two are inbound (international business buying regional assets).

In terms of total domestic deal value in Q1 2012, consumer products assets have replaced real estate as the most sought after sector in MENA, valued at $572 million. Real estate saw deals worth $562.1 million, followed by transportation and insurance deals worth $140 million and $125 million, respectively.

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Saudi Gazette