Regional mergers rise despite Arab Spring

Buyout activity in the Middle East and North Africa rose by 33 per cent in the first half of the year in spite of the region's recent spate of political turmoil.

Mergers and acquisitions blossomed in the Middle East and North Africa despite the Arab Spring, with a 33 per cent rise in the first half of the year.

During that period 173 deals were completed, compared with 130 in the first six months last year. The total value of the deals also increased by 30 per cent to US$21.17 billion (Dh77.75bn) from $16.26bn in last year's first half, a report said.

The results could presage "a positive outlook for regional [mergers and acquisitions] activity towards the end of the year", said Youssef Saada, the head of financial research at Zawya, a financial information and research firm based in Dubai.

Despite the rise in activity, the Middle East and North Africa still represent just a sliver of the global mergers and acquisitions market. Worldwide, companies and investors completed $2.12 trillion worth of deals last year, according to Bloomberg News data.

Mergers and acquisitions are deals involving companies purchasing or merging with other companies, as well as purchases by investors of private companies in the hope of turning in a profit when they sell.

The UAE led the rise in regional activity in the first half, with 32 deals targeting local companies compared with just eight in the same period last year. The country also netted the largest deal for the period when Abu Dhabi's International Petroleum Investment Company agreed to pay $5bn for 48.9 per cent of Cepsa, one of Spain's biggest energy companies. That deal was recently finalised.

Activity was strong despite the cancellation of the proposed $12bn acquisition by the UAE telecommunications giant Etisalat of nearly half of Zain Kuwait. The deal was shelved after regional turmoil erupted and tensions flared among Zain shareholders.

Saudi Arabia also experienced a significant rise in activity, according to the Zawya report, with the number of deals more than doubling to 24. The value of deals in the kingdom also rose to $1.71bn from $467.2 million in last year's first half.

But perhaps most surprising was the deal-making Zawya identified in Tunisia, which kicked off a spate of regional turmoil with the unseating of its president, Zine el Abidine Ben Ali, on January 14. Tunisia saw deals worth $2.14bn in the first half, led by two big transactions in the energy and telecommunications sectors.

While regional deal-making showed signs of a revival, the value of deals targeting companies in the region declined. Targeted mergers and acquisitions came in at $9.29bn in the first half, Zawya's report said, compared with $10.53bn in the same period last year.

Published: August 3, 2011 04:00 AM


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