Regional M&A deal values down two-thirds, says Ernst & Young

Mergers & Acquisitions (M&A) deals announced in the Middle East and North Africa (MENA) region dropped by 67% in value to US$34Bn in 2009 compared to deals worth US$102Bn announced in 2008. According to Ernst & Young’s annual MENA M&A update, the number of announced deals dropped from 465 in 2008 to 353 in 2009, a decline of 24%.
 
The number of announced outbound deals was down from 160 in 2008 to 92 in 2009, a drop of 42%, while domestic deals also fell from 239 to 191 in the same period. However, the number of inbound deals increased by 6% - from 66 in 2008 to 70 deals in 2009.
 
The fourth quarter of 2009 also saw a steep fall of 73% in deal value compared to the corresponding quarter in 2008. Although there has been an overall drop in the volume and value of transactions in 2009, the total number of deals in Q4 2009 (70 announced deals) was 30% higher than the number of deals executed during the same quarter in 2008(54 announced deals). The strongest increase was seen in the inbound deals category, from 5 in Q4 2008 to 14 in Q4 2009, an increase of 180%.
 
Deal values plummet
The value of domestic deals fell by 58% (from US$27.6Bn in 2008 to US$11.6Bn in 2009), while outbound deals dropped by 72% (from US$69Bn in 2008 to US$19.3Bn in 2009). Value of inbound deals also fell by around 46%.
 
Comparative performance
Deals with a size greater than US$500Mn have fallen from 14% in 2008 to 8% in 2009. Smaller sized (less than US$100Mn) deals have increased from 59% to 62%, while the medium sized deals (US$100Mn - US$500Mn) increased from 27% to 30% in 2009.
 
UAE leads deal count and Egypt tops deal value
In terms of number of domestic and inbound transactions, UAE recorded the most with 65 deals, followed by Egypt (40 deals), Saudi Arabia (34 deals) and Kuwait (31 deals). In terms of deal value, Egypt has attracted 23% of the total disclosed domestic and inbound funds in the region at US$3.33Bn followed by Morocco (US$2.86Bn), and Kuwait (US$2.26Bn).
 
Industrial products and banking services lead regional market activity
Diversified industrial products led the number of inbound transactions in 2009 with 11 deals. Banking and capital markets recorded the most number of domestic deals (39) and the highest value for both inbound (US$941Mn) and domestic deals(US$3.6Bn).
 
Domestic transactions comprise almost 54% of the activity, followed by outbound at 26% and inbound at 20%. Value-wise, outbound transactions comprised 50% of activity followed by domestic transactions (44%) and inbound at 6%.