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”