Middle East merger, acquisition activity slows during Q1

PwC Middle East's annual regional report also shows a market decline in M&A activity in 2018
Middle East merger, acquisition activity slows during Q1
By Sam Bridge
Wed 10 Jul 2019 01:39 PM

Merger and acquisition activity in the Middle East has continued to slow this year after also declining last year, according to new research.

PwC Middle East's annual report showed a market decline in M&A activity in 2018, with the total number deals decreasing from 267 in 2017 to 214.

It said M&A activity continues to remain slow in the current year, with 44 deals reported in the first quarter of 19 compared to 56 deals in Q1 last year and only 1 IPO reported compared to four in the year-earlier period.

Private equity activity also saw a decline, dropping from 26 percent to 21 percent of all deals in 2018. Corporate acquirers however increased their share of deals from 54 percent in 2017 to 60 percent in 2018, with energy, financial services and healthcare among the most active sectors.

These figures reflect the generally bearish sentiments of Middle East business leaders as shown in PwC's latest global CEO survey, where only 28 percent of the region’s CEOs said they were “very confident” about their company’s revenue prospects over the next 12 months, compared to 35 percent among their global peers.

Romil Radia, deals client & markets leader at PwC Middle East, said: “Our report reveals a varied landscape across markets and sectors, with several prominent themes emerging despite macro-economic challenges and a slowdown in the 2018 deal market. 

“We are positive that inbound interest in the region will continue, as evidenced by some iconic deals that have marked the start of 2019, and ongoing interest in the energy/infrastructure sector. We expect to see a positive outlook in M&A activity for some sectors over the next 12-18 months.”

He added: "Another trend to look forward to is tech driven activity. We have already seen a number of deals completed in the sector in the last year and we expect this to continue going forward as businesses will look to acquisitions to expand their digital footprint in the region and protect their existing services and market share from start-ups or new entrants."

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