Total mergers & acquisitions (M&A) deal volumes in the Middle East and North Africa (MENA) region registered a healthy rise of 36 percent in H1 2011, according to Ernst & Young’s H1 2011 MENA M&A Update.
Disclosed deal values grew by eight percent to $20 billion in H1 2011, compared to deals worth $18.5 billion announced in H1 2010. Q2 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 percent from $14.1 billion in Q1 2011 to $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 percent ($709 million) of the total disclosed deal value in the domestic space in Q2 2011. The UAE followed at 22 percent ($378 millioon) and Kuwait at 16 percent ($273.1 million).”
Domestic transactions by volume were about 50 percent 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 $3.6 billion, or 62 percent 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 percent of total announced deals in Q2 2010; and outbound deals held the greatest value among total announced deals, comprising $9.1 billion or 76 percent 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 Gandier.
Domestic deal sizes growing
Average deal size of announced M&A deals in H1 2011 came in at $240.8 million, at similar levels of the same period last year when average deal value was $215 million. Average domestic deal size increased by 31 percent, from $127 million in H1 2010 to $166.4 million H1 2011.
In the cross-border segment, average size of inbound and outbound deals in H1 2011 increased by 22 percent and by 23 percent respectively, as compared to H1 2010. Sectors that attracted most inbound deal activity in Q2 2011 were Diversified Industrial Products (six deals worth US$280 million) and Professional Firms & Services (five deals).
In the domestic M&A space, the sectors with the greatest deal activity in Q2 2011 were Diversified Industrial Products (eight deals) and Consumer Products (seven deals). The sector with the greatest deal value in the domestic space in Q2 2011 was Insurance, worth $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 and leisure) with four deals. Sectors with the greatest deal value in the outbound space in Q2 2011 included Banking & Capital Markets ($1.9 billion), Power and Utilities ($736 million), and Real Estate ($379 million).
