MENA M&A Market at Its Lows during 3Q2015

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The MENA M&A market maintained, in 3Q2015, the slow activity witnessed during the recent period, as it fails to redress from the current lows. The overall 12-month activity falls short from any sign of rebound, enduring the impact of the regional political turmoil and the economic spillover effects of the slump in oil prices which are amongst the major factors weighing on investor confidence in the MENA region. Despite the short to medium term challenges, when thinking long-term, the region still depicts largely attractive economic fundamentals to sufficiently propel more transactions going forward.

With the total number of completed deals generally declining since 2009 yet slightly improved during the past 2 quarters relative to 1Q15 low levels, the announced value of M&As reached less than $3 billion during 3Q15 which is well below the average levels of the past 6 years. Such trend has depressed the average deal sizes although the case of larger transactions in the coming future still holds. The below graphs 1 & 2 show the growing value of deals against the backdrop of declining number of deals over the period 2009-1H2014 while a trend reversal has been incurring during the last 5 quarters.

From a geographic perspective, while deal activity remains at large driven by a strong performance in GCC, the non-GCC countries attracted during 3Q2015 most of the count and value of completed deals in an indication of weaknesses witnessed within the oil exporting countries. In fact, the GCC region accounted during the past 3 months for only 45% and 44% respectively of the announced value and the volume of completed deals. This is compared to a historical share of circa 63% of deal values, against 36% of deal volumes. On the overall, the general trend prevailing to-date is that of larger ticket sizes in the GCC, as opposed to a larger number of smaller deals in other MENA countries.

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