Zawya report highlights M&A deal volume increase by 33% in 1H2011 across the MENA Region

Zawya, the leading online provider of business intelligence on the MENA region, announced today itsMENA Mergers and Acquisitions report,“Shrugging off the effects of the Arab Spring”, for 1H2011.The report reveals that M&A activity in the Middle East and North Africa increased in the first half of 2011, shrugging the effects of political turmoil in the region.

1H2011 witnessed a total of 173 deals, an increase of 33% over the 130 deals closed in the same period of 2010. In terms of total deal value, M&A activity increased 30%, reaching USD21.17 billion in 1H2011, compared to USD 16.26 billion in H12010.  The countries in this report include: the GCC and Levant countries, in addition to Egypt, Morocco, and Tunisia.

Youssef M. Saada, Head of Financial Research at Zawya,commented: “Zawya's M&A tools bring forth a comprehensive coverage of regional M&A activity, allowing identification of trends and opportunities and more over creating a dialogue within the industry. Our MENA report "Shrugging off the effects of the Arab Spring" highlights the important players in the region and presents a positive outlook for regional M&A activity towards the end of year 2011”.

Tunisia witnessed the largest average deal value of USD535 million in the first half of 2011, with four deals totaling USD2.14 billion. In comparison, in 1H2010, Qatar recorded the highest average value per deal with USD937 million from six deals valued at USD5.6 billion.

However, the UAE took the lead in terms of deal volume with 32 deals in 1H2011 compared to nine in 1H2010, resulting in a remarkable increase of 226%. Targeted deal values in the UAE amounted to USD2.07 billion in 1H2011, compared to USD633.91 million in 1H2010, resulting in an increase of 226%.

The UAE also secured the largest M&A transaction in 1H2011 worth USD5.06 billion, when Abu Dhabi-based International Petroleum Investment Company acquired an incremental 48.9% equity stake in Spain’s Compania Espanola de PetroleosSA. This eclipsed the largest deal of 1H2010, which was between Ezdan Real Estate Company and International Housing Company in Qatar, marking a USD3.33 billion deal value.

One of the most prominent deals in 1H2011 was the cancellation of Emirates Telecommunications Company (Etisalat) acquisition of a 46% stake in Zain Kuwait for USD 12.09 billion, valued as the largest M&A deal in the region. The cancellation was primarily due to a lack of consensus between Zain shareholders.

Saudi Arabia saw the number of deals increase by 118.18% from 11 in 1H2010 to 24 in 1H2011 reflecting a solid economy. Deal value in Saudi Arabia increased by 266% from USD467.2 million in 1H2010 to USD1.71 billion in 1H2011. There were four external investors, with 20 regional and domestic players, clearly demonstrating a huge appetite within the region to invest in Saudi Arabia.

M&A activity also surged in non-GCC countries with Tunisia, Lebanon and Morocco being the main drivers. The total targeted value of M&A activity in the MENA region during 1H2011 reached USD9.29 billion, out of which the GCC countries contributed 56% for a total of USD 5.23 billion. Comparatively,

1H2010 logged USD10.53 billion, from which the Gulf nations contributed USD8.35 billion, or 79%.

Across the MENA region, the sectors targeted by investors saw little change from 1H2010 to 1H2011. The financial services, industrial manufacturing and real estate sectors continue to dominate the charts in terms of deal volume in targeted sectors in both 1H2010 and 1H2011. In terms of deal value, Oil and gas topped the charts, with USD6 billion in 1H2011, compared to real estate’s USD 4.7 billion in 1H2010.