Mideast M&A deals decline in Q1 2018: report

The Middle East and North Africa (MENA) region’s merger & acquisition (M&A) deals fell 21.8 percent year-on-year to record 93 disclosed deals in the first quarter of 2018, compared to 119, according to Ernst and Young’s (EY) first-quarter 2018 M&A report.

The total disclosed deal value in the MENA region also saw a 26.7 percent decline in the first quarter this year to register $15.4 billion, down from $21 billion in the year-ago period, Gulf News reported, citing EY.

The highest deal value was achieved by the UAE, with $5.1 billion from 23 disclosed deals in the first three months of 2018.

The number of inbound deals increased 42.1 percent to hit 27 deals after 19 in the first quarter of 2017, with values surging 138.7 percent to reach $7.4 billion, up from $3.1 billion.

On the other hand, the outbound and domestic deals saw a drop in numbers and values; the later leveled down 63.8 percent and 28.2 percent, respectively.

“Confidence in the economy remains strong, though MENA companies are taking a pause as rising inflation, market volatility, and high deal valuations have businesses looking to preserve capital rather than deploy it in the short term,” said Phil Gandier, MENA Transaction Advisory Services Leader at EY.

He highlighted that the UAE firms have dominated both inbound and outbound M&A activity and are expected to keep controlling this year as well, while Saudi and Egyptian companies are taking a “wait-and-see approach.”

Oil and gas sector recorded the highest deal value in the first quarter of 2018 worth $7.2 billion, followed by the chemicals and insurance sectors with a deal value of $2.5 billion and $1.2 billion, respectively.

“Although deal volume has been modest in the first quarter of 2018, deal values relating to acquisition capital deployed in MENA in [the first quarter of] 2018 have reached their highest levels since 2001, with $10.2 billion invested in the region. The insurance, medical and education sectors have seen the highest allocation of acquisition capital,” said Gandier.