Inbound Middle East M&A deal value more than doubled that of 2015, while volume remains the same
Business Reporter –
MUSCAT, FEB 1 –
Global cross-border M&A activity dipped slightly in 2016 compared to the previous year, as a result of turbulent and unpredictable global events, but the Middle East saw robust cross-border M&A activity, particularly on inbound deals, according to Baker McKenzie’s Cross-Border M&A Index.
Despite political and economic uncertainty, the global market remained fairly resolute from Q3 2016 to Q4 2016, with a 2 per cent uplift in volume and only a 1 per cent drop in value compared with the previous quarter, and overall market conditions still looking good for long-term deal making.
The global Index, which tracks quarterly deal activity using a baseline score of 100, was 249 in the final quarter of the year, only down 1.5 per cent from the previous quarter, but a significant 30 per cent fall from this time last year where 2015’s
record-breaking fourth quarter Index hit 358.
Despite the fall in deal making, the Index in Q4 still remains higher than it was at its launch in 2009 through to 2013.
Half of the top ten deals of the year were either in the technology or energy and utilities sectors, and in Q4 the Technology sector led by value with $66.9bn in deals, whilst the Industrials sector led by volume, with 227 cross-border deals (worth $19bn).
Despite being a long way off Q4 2015’s record-breaking Middle East Index figure of 591.5, the Q4 2016 Index of 181.6 doubled that of the third quarter (91.2) and underlined the continued strength of cross-regional M&A activity in the region, with the United Arab Emirates (UAE) as the dominant country for both inbound and outbound deals in Q4 2016.
“Cross-border M&A activity in the Middle East has seen a robust year of deal making in spite of investor uncertainty and market instability,” said Will Seivewright, Corporate/M&A Partner at Baker McKenzie Habib Al Mulla, based in the UAE. “The remarkable increase in cross-regional deal value and the steady flow of deals for 2016 bodes well for M&A in the coming year.”
George Sayen, Head of Corporate Practice Group at Baker McKenzie’s associated firm in Riyadh, added, “Cross-border M&A activity in the region has fared relatively well in 2016 notwithstanding global political and economic volatility.
Looking forward, we expect Saudi Arabia’s Vision 2030 to generate considerable deal activity in specified sectors such as technology, healthcare, education, and transport”.
The value cross-regional M&A deals targeting the Middle East for 2016 more than doubled that of 2015, rising from $3.95 billion to $10 billion, attributable to a few mega deals in the Transportation and Energy & Utilities sectors.
Inbound cross-regional deal volumes for 2015 and 2016 remained the same, with 29 deals each year.