Dubai, United Arab Emirates (ME NewsWire): 2015 has proven to be rather disappointing in terms of M&A activity targeting companies based in the Middle East and North Africa (MENA). Deal values have declined against an increase in volume year-on-year, according to Zephyr, the M&A database published by Bureau van Dijk. In total some USD 30,595 million was invested in 2015, representing an 11 per cent drop on the USD 34,529 million injected in 2014 and the second consecutive annual decline. Despite the decline in value during 2015, volume increased by 26 per cent from 521 deals in 2014 to 657. This represents the second highest yearly volume of the last six years, proving that there is an appetite for deals in the region.
This is backed up by the fact that a number of large deals were announced, with five transactions worth USD 1,000 million or more agreed in 2015. The largest deal targeting the MENA region was an asset sale by OCI worth USD 8,000 million. CF Industries, through its nitrogen fertiliser holding company Darwin Holdings, agreed to acquire OCI’s global distribution business in Dubai, among other European and North American assets, in August. This deal accounted for 71 per cent of all investment in the MENA region in Q3 and 26 per cent of total value for the year.
Q4 was fairly muted in that no out-and-out “mega” deal was announced; the most valuable transaction to have been agreed during the final three months of the year was worth USD 1,215 million and involved Saudi Telecom agreeing to buy the 74 per cent stake it did not already own in Kuwait Telecom. This was closely followed by a planned USD 1,000 million purchase of a 49 per cent shareholding in UAE-headquartered payment processing firm Network International by Warburg Pincus and General Atlantic. These deals accounted for a significant portion of total values targeting the MENA region in Q4. Together they made up 29 per cent of the USD 7,644 million injected over the final quarter.
In terms of 2015 as a whole, the UAE was the most valuable country of the year, having been targeted in deals worth USD 15,186 million, 29 per cent higher than the USD 11,809 million recorded in 2014. The figure is almost four times larger than that of second-placed Egypt, which was targeted in deals worth USD 3,923 million.
GCC countries featured heavily in 2015 as the year’s top five countries in terms of value included three GCC regions. Following the UAE’s first placed finish, Saudi Arabia and Kuwait came third and fourth, respectively. GCC dealmaking was in line with overall M&A activity for the MENA region as value declined year-on-year in many of the six countries, with the UAE and Saudi Arabia proving to be the only exceptions. Likewise, most of the GCC regions improved on 2014 by volume, with only Qatar declining year-on-year and Bahrain remaining level on 11 deals.
In all, GCC countries accounted for 73 per cent of deal value in the MENA region in 2015, which is unsurprising given that of the 20 largest deals signed off during the year, 11 featured GCC-based targets, including the year’s top seven transactions.
As regards 2016 it is hard to predict market performance levels, although we can look at large deals which are expected to complete during the coming year to give some sort of an indication. At present there do not appear to be any “mega” deals which are scheduled to close in the near future; the largest pending transaction targeting a MENA-based company is worth USD 447 million and involves Samsung Engineering and Samsung India increasing their investments in Samsung Saudi Arabia in a deal which is expected to complete by the end of 2016. Deals scheduled to close during the first quarter of 2016 include a USD 375 million purchase of a 30 per cent shareholding in Saham Finances by Sanlam, via wholly-owned subsidiary Sanlam Engineering Markets and Santam.
On top of this, there have been a number of significant rumours of deals targeting MENA companies during Q4; in October sources with knowledge of the situation told Reuters that UAE-headquartered National Food Products Company was considering a sale of a stake valued at USD 1,500 million. In December four people in the know told the news provider that Saudi Arabian dairy product manufacturer Almarai was interested in picking up a share of the business. Another valuable rumour was reported by the Jakarta Globe in October; the paper said Syamsu Alam, upstream director at Pertamina, plans to reserve between USD 900 million and USD 1,000 million for acquiring oil and gas assets overseas, including in Iran. However, as yet no indication has been given as to when such a deal is likely to occur.
Bureau van Dijk (BvD) is the leading provider of private company, corporate ownership and deal information. BvD’s product range combines data from regulatory and other sources, including 140 information partners, with flexible software to allow users to manipulate data for a range of research needs and applications. Its Orbis database provides information on 180 million companies across the globe. In addition, BvD addresses specific business challenges through its range of Catalysts including transfer pricing, credit, procurement, KYC, client on-boarding, M&A research and valuations, while BvD custom delivers bespoke solutions.
ME NewsWire
