MENA M&A deal volumes up 36%; Values rise by 8% in H1 2011

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  • Deal volumes in Q2 2011 increased by 43% compared to the same period last year, from 67 deals in Q2 2010 to 96 deals in Q2 2011
  • Deal values in Q2 2011 down by 52%, from US$12bn in Q2 2010 to US$5.8bn in Q2 2011

Total Mergers & Acquisitions (M&A) deal volumes in the Middle East and North Africa (MENA) region registered a healthy rise of 36% in the first half of this year. This is according to Ernst & Young’s H1 2011 MENA M&A Update. Disclosed deal values grew by 8% to US$20 billion in H1 2011, compared to deals worth US$18.5 billion announced in H1 2010.

The second quarter of 2011 saw deal volumes remain consistent, marginally declining to 96 from 98 deals in Q1 2011. Deal value, however, declined significantly between quarters, falling 59% from US$14.1 billion in Q1 2011 to US$5.8 billion in Q2 2011.

The UAE and Saudi Arabia remain most active

The top countries that saw the largest number of transactions in Q2 2011 were the UAE (14 deals) and Saudi Arabia (13 deals).

Phil Gandier, MENA Head of Transaction Advisory Services, Ernst & Young said : “Saudi Arabia also ranked highest in the region in terms of deal value, comprising approximately 42% (US $709 million) of the total disclosed deal value in the domestic space in Q2 2011. The UAE followed at 22% (US$378 mn) and Kuwait at 16% (US$273.1 mn).”

Outbound deals beat inbound and domestic in terms of value

Domestic transactions by volume were about 50% of total announced deals in Q2 2011, outnumbering inbound and outbound deal activity. In terms of value, however, outbound deal activity held the greatest value among total announced deals, comprising US$3.6 billion, or 62% of total announced deal value in Q2 2011.

Comparatively, in Q2 2010, domestic transactions by volume also outnumbered inbound and outbound deal activity, comprising 45% of total announced deals in Q2 2010; and outbound deals held the greatest value among total announced deals, comprising US$9.1 billion or 76% of total announced deal value.

“The region’s cash rich companies continue to make global acquisitions and this is reflected in outbound acquisition activity. This trend is firmly set and is expected to continue as high quality global assets become more attractive in long-term value,” commented Phil.

Domestic deal sizes growing

Average deal size of announced M&A deals in H1 2011 came in at US$240.8 million, at similar levels of the same period last year when average deal value was US$215 million. Average domestic deal size increased by 31%, from US$127 million in H1 2010 to US$166.4 million H1 2011.

In the cross-border segment, average size of inbound and outbound deals in H1 2011 increased by 22% and by 23% respectively, as compared to H1 2010.

Diversified Industrial Products shows highest sector-wise activity

Sectors that attracted most inbound deal activity in Q2 2011 were Diversified Industrial Products (6 deals worth US$280 million) and Professional Firms & Services (5 deals).

In the domestic M&A space, the sectors with the greatest deal activity in Q2 2011 were Diversified Industrial Products (8 deals) and Consumer Products (7 deals). The sector with the greatest deal value in the domestic space in Q2 2011 was Insurance, worth US $400 million.

In the outbound space, the sector that experienced the greatest deal activity in Q2 2011 in terms of volume was Real Estate (including hospitality & leisure) with 4 deals. Sectors with the greatest deal value in the outbound space in Q2 2011 included Banking & Capital Markets (US$1.9 billion), Power and Utilities (US$736 million), and Real Estate (US$379 million).

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