Middle East M&A deals value surges 73% despite global slump

Mergers and acquisitions totalled $28.8 billion from 163 deals in the Middle East so far in 2019
Middle East M&A deals value surges 73% despite global slump
By Shane McGinley
Thu 15 Aug 2019 01:22 PM

While the value of global merger and acquisition (M&A) activity falling by 12 percent in the first half of 2019, the total value of deals in the Middle East surged 73 percent over the same period, according to new data.

Despite global M&A activity in the first six months of 2019 falling 12 percent year-on-year to a total of $2.0 trillion, the number was the third largest opening period since records began in 1980, according to data released this week by Refinitiv.

Within the emerging market sector, M&A deals totalled $495.9 billion during the same period, a year-on-year decrease of 14 percent and the slowest opening six-month period since 2017. 

While the global outlook appears negative, the Middle East region performed much better. The number of deals fell 6 percent from 174 to 163, but the total value of M&A activity surged 73 percent to $28.793 billion.

This was helped by the fact that the period included the $69.1 billion acquisition of a 70 percent interest in SABIC by the Saudi Arabian Oil Co (Saudi Aramco), which Refinitv ranks as the largest all-ever emerging markets M&A transaction. The SABIC deal was also the fourth largest M&S deal globally in the first half of 2019.

The SABIC deal wasn’t the only Gulf deal to make the top rankings. Kuwait Finance House’s $7.6 billion deal with Bahrain’s Ahli United Bank was the fifth biggest deal in the emerging markets sector.

In terms of advisors, JP Morgan took the top spot and was involved in $113 billion from 33 deals in the emerging markets. Second was Morgan Stanley and third was Citi.

Earlier this month, according to the Q2 2019 Lumina Private Company Index (LPCI), the United Arab Emirates and Saudi Arabia made up 90 percent of the M&A deals completed by private companies in the first half of 2019.

“The construction and contracting sector continues to face significant challenges despite announced infrastructure spending across the region and the impact of these initiatives are yet to translate into deal activity,” the report said.

George Traub, managing partner at Lumina, said: “According to respondents to our ‘State of M&A’ survey, the main reasons driving private company M&A are succession planning (46 percent), access to capital (34 percent) and diversification of markets (38 percent).

“Saudi Arabia is expected to lead the volume of transactions during the remainder of the 2019, based on elevated levels of deals preparations we are seeing from clients, fuelled by government led infrastructure and social reforms.”

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