In 2011, the value of total deals stood at $12.5bn compared with $14bn in 2010.
“This is positive news for the M&A industry in the Middle East for it shows that a degree of investor confidence is returning to the Middle East market despite the Arab Spring and crisis in the Eurozone,” said mergermarket’s head of GCC and Middle East, Lucia Dore.
But the data also shows that although the number of deals in the region transacted is creeping back to pre-financial crisis levels, actual deal size is getting smaller. While it took 35 deals to reach the $4bn figure this past quarter, back in Q3 2009 only 30 deals were required to achieve $11.1bn.
For the 13 months to the end of the first quarter this year, the most buoyant sector proved to be industrials and chemicals with $4.2bn worth of deals, constituting one-quarter of the total deal value of $16.5bn. However, this sector saw a turn of fortunes in the first quarter of the year with no deal activity at all.
Other top-ranking sectors in terms of deal activity for 2011 were consumer ($2.9bn) followed by technology ($2.3bn), financial services ($1.8bn), and the pharma, medical and biotech sectors ($1.5bn).
Surprisingly, over this 13-month period there was little deal activity in the telecom sector ($185m), despite the considerable expectation that there would be. The low level of deal activity reflects the failed bid by Etisalat, the UAE telecom operator, for a 46% stake in Kuwait’s telco Zain early last year. This was followed a few months later by a consortium comprising Batelco, the Bahraini telecom operator and Saudi investment firm, Kingdom Holding, abandoning their bid to acquire a 25% stake in Zain Saudi.
For the first quarter of the year, the consumer sector was one of the most buoyant ($1.2bn), next to financial services ($1.3bn). March saw a major transaction with the the takeover of Nasdaq Dubai listed jewellery chain, Damas International, by Qatari conglomerate, Mannai Corporation for $445m.
Early February, a $134m transaction also closed early, with the Turkish beverage company, Coca Cola Icecek, buying an 85% stake in Iraq’s soft drinks firm, Al Waha for Softdrinks, Mineral Water and Juices.
“For the remainder of the year, M&A activity is expected to pick up driven largely by private equity firms carrying out trade sales, large scale restructuring of family-owned companies and government entities, and a narrowing of the valuation gap between buyers and sellers,” Lucia Dore said.
Wednesday, April 25- 2012 @ 11:24 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.