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Mergers and Acquisitions (M&A) In the Mena Region for the First Quarter of 2017

Mergers and Acquisitions (M&A) In the Mena Region for the First Quarter Of 2017

The below article is a representation of the original article published in Zephyr by Bureau van Dijk and hence all credit for this article belongs to them. The article provides a brief about the M&A activities in the Middle East and North Africa (MENA) region in the first quarter of 2017. Baker Tilly Kuwait has merely paraphrased the article to convey the same message. Target companies within Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Syria, Tunisia, UAE, Yemen and part of the MENA region coverage within this article.

 

Increase in value and decline in volumes

MENA witnessed 160 M&A transactions in the first quarter of 2017 with a comprehensive value of USD 12.6 billion. While there was a 13% increase in value as compared to the last quarter of 2016 at USD 11.2 billion, it came against a 3% decrease in volume. This suggests that individual deals were executed at higher levels in the first quarter of 2017 as opposed to larger volumes with lower values. In fact the first quarter of 2017 saw the lowest volume since first quarter of 2015 at almost 148 deals as evident from the table below:

 

Deals by volume and value:

Announced Date Number of Deals Total deal value (USD Million)
 Q1 2017  160  12,645
 Q4 2016  165  11,164
 Q3 2016 168  22,626
 Q2 2016  181  12,274
 Q1 2016  185  12,699
 Q4 2015 170  10,252
 Q3 2015  188  2,577
 Q2 2015 185  6,529
 Q1 2015 148  5,106

 

M&A Deals in Q1 2017

Deal value(mil USD)
Deal type
Target
Target Country
Acquirer
Acquirer Country
Deal status
 1,770  Minority stake 8%  Abu Dhabi Company for Onshore Oil Operations  AE  China National Petroleum Corporation  CN  Completed
1,673  Acquisition 100%  National Titanium Dioxide Company Ltd’s titanium dioxide business SA  SA  Tronox Ltd AU  Pending
 1,120  Minority stake 21%  Arab Bank plc  JO  Consortium  Completed
 1,000  Acquisition 100%  Souq.com FZ LLC  AE  Amazon.com Inc.  US  Announced
 929  Acquisition increased 67% to 93%  Kuwait Food Company SAK KW  Adeptio AD Investments SPC Ltd  AE  Completed
 898  Minority stake 4%  Abu Dhabi Company for Onshore Oil Operations  AE  CEFC China Energy Co., Ltd  CN  Completed
 898  Minority stake 4%  Abu Dhabi Company for Onshore Oil Operations  AE  CEFC China Energy Co., Ltd  CN  Completed
 820  Acquisition increased 50% to 100%  The Saudi Petrochemical Company  SA  Saudi Basic Industries Corporation SJSC  SA  Announced
 731  Capital Increase 62%  Fajr Petrochemical Company PSC  IR  –  Completed
 667  Minority stake 43%  El Mostakbal for Urban Development  EG  Banque Misr SAE  EG  Completed
 368  Capital Increase 30%  Khorasan Steel Complex Company PSC  IR  –  EG  Completed
 355  Capital Increase 14%  Doha Bank QSC  QA  –  Announced
 242  Capital Increase 13%  National Iranian Copper Industries Company  IR  –  Completed
 213  Capital Increase 22%  Mines and Metals Development Investment Company PSC  IR  Completed
 183  Minority stake 4%  DAMAC Properties Dubai Co PSC  AE  Premium Investment International LLC  AE  Completed
 132  Acquisition increased to 99%  United Bank of Egypt  EG  Central Bank of Egypt  EG  Announced
 97  Minority stake 13%  International Medical Company Ltd  SA  Amanat Holdings PJSC  AE  Completed
 96  Minority stake and Minority stake 8%  Al Aqeeq Real Estate Development Company; Arab Resort Areas Company  SA  A Taiba Holding Company  SA  Announced
 90 Capital Increase 67%  Iran Behnoush Company PSC  IR  –  Announced
79  Minority stake 33%  Educational Holding Group  KW  Boubyan Petrochemical Company KSCC  KW  Announced
79  Minority stake 9%  EFG-Hermes Holdings SAE  EG  RIMCO EGT Investment LLC  Completed

The deals for the first quarter of 2017 were dominated by four deals each worth USD 1000 million or more amounting to nearly 44% of the quarters overall value. There were 9 deals worth more than USD 500 million in the same quarter.

From the top 20 deals by value, Iranian companies dominated with 5 of those deals closely followed by UAE and Saudi Arabia at 4 deals each.

Foreign buyers dominated the M&A ecosystem and at USD 1,770 million, China National Petroleum Corporation’s acquisition of an 8% stake in an Abu Dhabi Company for Onshore Oil Operations was the largest in the quarter. The titanium dioxide (TiO2) business of National Titanium Dioxide is propositioned for a takeover by Tronox of Australia, the deal valued at USD 1,673 billion. Amazon, the US based e-commerce giant announced the acquisition of Souq.com for a value of USD 1,000 million. Souq.com is the largest online retail and marketplace in the Arab region.

 

Top Target Countries by Volume and Values

Top Country by Volume:

 Target Countries  Q1 2016 Q4 2016 Q2017
Egypt 35 34 33
UAE 25 31 30
Jordan 30 24 27
Kuwait 16 3 17
Iran 33 21 17
Saudi Arabia 18 11 11
Tunisia 4 8 8
Bahrain 3 7 5
Morocco 7 11 4
Qatar 2 3 3
Lebanon 6 4 3
Oman 7 7 2
Iraq 0 0 1
Palestine 1 0 0
Libya 0 0 0
Yemen 0 0 0
Algeria 2 1 0
Syria 0 0 0

Egyptian companies at 33 deals was the leader in terms of volumes during the first quarter of 2017, on the other hand companies based in the UAE were a close second with 30 deals. While the quarter-on-quarter growth in the volume of deals in the MENA region mostly fell if not remained constant, Kuwait saw a growth five times higher at 17 (Q4 2016: 3).

 

Top Country by Value:

 Target Countries  Q1 2016 Q4 2016 Q2017
UAE 738 4,438 3,940
Saudi Arabia 682 422 2,687
Iran 1,626 2,361 1,862
Kuwait 6,546 10 1,337
Jordan 197 459 1,250
Egypt 462 797 1,122
Qatar 558 430 355
Morocco 941 1,601 44
Bahrain 256 37 40
Tunisia 8 175 22
Lebanon 401 29 17
Oman 279 344 0
Palestine 2 0 0
Algeria 8 60 0
Iraq 0 0 0
Libya 0 0 0
Yemen 0 0 0

UAE companies at USD 3,940 million were the leader in the quarter in terms of values. However, Saudi Arabia recorded a quarter-on-quarter growth at 6 times to USD 2,687 million in the first quarter of 2017 (Q4 2016: USD 422 million) thus overtaking Iran in deal making (Q4 2016: USD 2,361 million; Q1 2017 USD 1,862 million).

 

Top Target Sectors by Volume and Values

Top Sectors by Volume:

 Target Countries  Q1 2016 Q4 2016 Q2017
Other services 66 53 44
Construction 19 14 23
Education, health 7 9 13
Banks 7 6 12
Chemicals, rubber, plastics 18 21 12
Wholesale & retail trade 4 6 8
Insurance companies 10 7 8
Primary sector 7 4 7
Food, beverages, tobacco 7 5 6
Machinery, equipment, furniture, recycling 5 9 5
Hotels & restaurants 7 3 5
Metals & metal products 4 4 4
Wood, cork, paper 4 0 4
Textiles, wearing apparel, leather 0 3 3
Gas, water, electricity 4 1 2
Transport 8 2 2
Post and telecommunications 1 2 2
Publishing, printing 7 9 1
Public administration and defense 0 0 0

Companies within the construction sector dominated the deals in the first quarter of 2017 with 23 announced deals valued at USD 1,126 million, while the Education and health industry were next by volume (Q4 2016: 9; Q1 2017: 13).

 

Top Sector by Value:

 Target Countries  Q1 2016 Q4 2016 Q2017
Chemicals, rubber, plastics 1,449 637 3,324
Primary sector 120 2,620 2,787
Banks 1,337 1,992 1,922
Construction 646 36 1,126
Hotels & restaurants 3,716 11 1,029
Wholesale & retail trade 276 272 1,025
Metals & metal products 902 1 612
Other services 2,908 2,270 526
Education, health 46 784 198
Food, beverages, tobacco 134 178 118
Machinery, equipment, furniture, recycling 103 16 31
Insurance companies 848 1,525 21
Wood, cork, paper 6 0 12
Textiles, wearing apparel, leather 0 0 10
Publishing, printing 7 46 0
Public administration and defense 0 0 0
Post and telecommunications 36 90 0
Transport 157 79 0
Gas, water, electricity 7 0 0

The most valued sector in the first quarter of 2017 was chemicals, rubber and plastics industry with a value of USD 3,324 million, followed by the primary sector (Q4 2016: USD 2,620 million; Q1 2017: USD 2,787 million).

 

M&A outlook MENA

A significant increase in M&A activity is sensed particularly in the UAE which has strong economic fundamentals and continues to draw investors to the region. The outlook for M&A activity in the MENA region is optimistic in the long run as threats to the stability of the MENA economy ease, and dealmakers regain confidence in the market, their apprehension should turn into appetite.

Source : “Baker Tilly in Kuwait – Corporate Finance Unit”

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