Middle East merger activity jumps 62% in first half of this year

Increase in M&A driven by UAE deals, says Baker McKenzie

UAE lender Emirates NBD's $3.2bn acquisition of Turkey-based Denizbank in April was the biggest Middle East M&A deal in the first half of this year, according to a Baker McKenzie report. Jeffrey E Biteng / The NationalShow less

The value of mergers and acquisitions in the Middle East rose by 62 per cent year-on-year in the first half of 2018, driven by the UAE and dominated by cross-regional activity, according to a new report .

“Overall Middle East activity has been strong in H1 2018, with a significant uptick in aggregate values for both domestic and cross-regional deals compared to the same period last year,” said Omar Momany, head of corporate/M&A at Baker McKenzie Habib Al Mulla, based in the UAE.

“With a handful of standout mega deals and the governments across the Middle East catering to implement investor-friendly reforms and policies, the region is set to experience promising levels of M&A activity in the second half of the year.”

The aggregate value of all Middle East M&A activity rose to $25.4 billion from $15.7bn in the first half of 2017, with deal volume remaining at similar levels as last year, the firm’s report said. However, cross-regional deal activity increased by both value and volume in H1, with 65 per cent of all Middle East M&A activity cross-border in nature.

The UAE drove both inbound and outbound deal flow, accounting for 34 deals totaling $6.6bn and Dubai-based lender Emirates NBD’s $3.2bn acquisition of Turkey-based Denizbank in April ranked the top cross-regional deal by value, according to the report.

Deals targeting the Middle East increased 174 per cent to $8.1bn in the first half of 2018. Inbound deal activity was driven by the acquisitions of Abu Dhabi National Oil Company’s oil field concessions by Austria’s OMG and French oil and gas giant Total, amounting to $2.6bn. Deal volume rose by 26 per cent to 54 deals.

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Outbound cross-regional deals from the Middle East increased by 20 per cent in value to $7.6bn and deal volume was also up by 9 per cent to 82 outbound deals, according to the report.

Meanwhile, domestic deal values spiked three-fold compared to the same period of 2017, driven by the pending $5bn merger of Saudi Arabia British Bank (SABB) and Alawwal Bank in Saudi Arabia.

The energy and power sector was the most attractive sector for inbound Middle East investment, accounting for 15 deals totalling $7.4bn.

“We continue to see healthy investor appetite and deployment of capital into the Middle East, particularly in the UAE with its strong underlying economic fundamentals and openness to foreign investment,” said Will Seivewright, corporate/M&A partner at Baker McKenzie Habib Al Mulla.