• Home
• /
• Local business

Middle East mergers’ value drops 38pc in H1

DUBAI - The value of mergers and acquisitions activity targeting the Middle East fell by 38 per cent in the first half of 2010 despite an 86 per cent increase in volume, highlighting the extent to which value has been stripped from deals in the region, according to a new report from M&A database Zephyr.

In the first-half of 2010, M&A activity in the region recorded a total of $11.912 billion through 229 deals compared with $11.42 billion through 132 deals in 2009 first-half.

In 2009, the Middle East region recorded 254 M&A deals valued at $30.7 billion, both significantly down compared to 426 deals valued at $54.7 billion reported in 2008.

The UAE was second in the Middle East for M&A activity in terms of volume after Jordan, and fifth by value at $981 million in the first half of 2010. Total M&A deals recorded in the UAE during the period were 28, Zephyr 
data reveals.

This year, Kuwait is number one in M&A value at $5 billion followed by Qatar at $1.56 billion, Lebanon at $1.3 billion and Jordan at $1.08 billion.

According to Ernst & Young, in the first quarter of 2010, M&A deal values announced in the Middle East and North Africa region dropped by 59 per cent to $6.5 billion compared to the same period in 2009. The number of announced deals dropped by 16 percent from 91 to 76.

Zephyr data shows that the largest Middle East deal by value in the first half of 2010 targeted Kuwait Real Estate Company and was one of four top 20 transactions to involve investment in the property industry. It was valued at $3.647 billion — almost four times more than the second-placed deal by value.

“There was a reasonably even spread of countries targeted in top 20 deals, with four recorded for Kuwait, three each for Qatar, the UAE and Oman and two apiece for Lebanon and Jordan. Iran, Syria and Yemen did not feature,” said Zephyr

Other sectors targeted by high-value deals included financial services, shipping and telecoms, as well as iron and steel production, petrochemicals and utilities.

The banking industry was the most important sector by value with a total for the half-year of $ 7.986 billion. This was despite the $ 3.647 billion-transaction targeting Kuwait Real Estate Company, which eclipsed other top 20 deals during the six-month period.

The downturn in mergers and acquisitions activity in the region during the first half of 2010 was in line with the global M&A trend that hit the lowest half-yearly level since before the onset of the financial crisis.

Globally, the value of M&A deals declined by 17 per cent to $1.478 trillion from $1.78 trillion in 2009 second-half, and $1.985 trillion in the first-half of the same year.

Deal volume also fell by 17 per cent, to 30,034 transactions from 36,001 in 2009 second half.

The total global deal value of $1.478 trillion was the lowest half-yearly result since $1.250 trillion was recorded in 2004 second half.

According to Zephyr, the most important global sectors by value for M&A deals were banking ($242 billion) and services ($222 billion). The services industry accounted for the largest proportion of global private equity investment ($22 billion), followed by machinery, equipment and furniture ($6.4 billion).

issacjohn@khaleejtimes.com