DOHA: The Mena region’s mergers and acquisitions (M&A) deal values grew 13 percent in 2013 to hit $50.7bn compared to $44.8bn a year ago, with Qatar and UAE leading the regional deal activity said a report by Ernst and Young (E&Y).
Of the top 10 announced deals by value in Mena in 2013, five of the deals were acquired by UAE companies and two by Qatari companies. The trend of telecommunications representing mega deal values continued in 2013 with Qatar Foundation buying a five percent stake in Bharti Airtel for $1.3bn.
The fourth quarter of 2013 saw higher deal activity yet lower deal value compared to the same period in 2012. Announced deal volumes increased by 11 percent from 107 deals in Q4 of 2012 to 119 deals in Q4 of 2013. Deal values declined by 40 percent from $13.3bn in Q4 of 2012 to $8bn Q4 of 2013.
In comparison to the previous quarter, announced deal values decreased from $17.5bn in Q3 of 2013 to $8bn in Q4 of 2013, whereas announced deal activity increased by 28 percent from 93 deals in Q3 of 2013 to 119 deals in Q4 of 2013.
Phil Gandier, Mena Head of Transaction Advisory Services, EY, said: “Overall, 2013 was a better year for the M&A market. However, Q4 2013 fell short in terms of deal value compared to Q4 2012. We expect performance to continue to improve into 2014 due to the alignment of core fundamentals such as positive economic sentiment, enhanced credit availability, the imperative for growth and the expectation to create jobs.”
According to EY’s latest Mena Capital Confidence Barometer (CCB), which measures corporate confidence and boardroom trends at a Mena level, 75 percent of respondents expect local deal volumes to improve and 51 percent consider growth their primary focus.
The sectors most likely to make an acquisition in the next 12 months are consumer products, real estate, automotive, diversified industrial products and financial services. 75 percent of Mena CCB respondents said they would use cash to fund their future acquisitions, which indicates high levels of liquidity with corporates and family businesses.
In terms of value, domestic deal values rose to $22.5bn, followed closely by outbound deals with announced deal values of about $18.5bn, 37 percent of total announced deal value in 2013. In terms of volume, domestic transactions outnumbered inbound and outbound deal activity, comprising 49 percent of total deals in 2013.
Total inbound announced deal value was $9.7bn, slightly short of $9.9bn of announced inbound deal value in 2012. The target sector focus of inbound deals in 2013 was oil and gas, representing 39 percent of total inbound deal value. In terms of volume, the oil and gas sector led as the target sector of inbound deals, with 18 deals, representing 18 percent of total inbound deals.
Anil Menon, Mena Head of M&A Advisory Services, EY, said: “Mena has historically been a net exporter of capital. 2013 was different in the sense that much of the acquisition capital was allocated within Mena.”
Of the 442 deals announced in the region in 2013, sovereign wealth funds (SWF) were involved in 19 deals with announced deal value of $14.5bn — making SWFs the single largest buyer constituency in Mena contributing 29 percent of total deal value in 2013.
The Peninsula
