The value of announced deals with disclosed value in the MENA region increased by 220.8 per cent to $115.5 bn in H1 2019, up from $36.0 bn in H1 2018, according to the EY H1 MENA M&A report. However, deal volume witnessed a decrease of 10.7 per cent, with 216 announced deals in H1 2019, down from 242 deals recorded in H1 2018.
The largest deal during H1 2019 was Saudi Aramco agreeing to acquire a 70 per cent stake in SABIC worth $69.1bn from PIF.
In H1 2019, state-owned entities were involved in 55 deals (25 per cent of total deals) amounting to $104.5bn, 90 per cent of the total deal value, including mega deals involving Saudi Aramco, ADNOC and ADIA.
Matthew Benson, MENA Transaction Advisory Services Leader, EY, says: “MENA corporates are finding innovative ways to raise capital and have stepped up the frequency of their portfolio reviews. The EY Capital Confidence Barometer (CCB) report indicates that 61 per cent of MENA executives say their companies are reviewing their portfolios every quarter or more frequently — more often than global executives. With more frequent portfolio reviews, several non-core businesses are set aside for divestment thereby fuelling deal activity.
“A further 87 per cent of MENA executives believe the global economy is improving, compared to 93 per cent on average across all executives in the study, globally, while 82 per cent share a similar sentiment about their domestic economy here in the MENA region. Looking ahead, we expect MENA companies to continue to reshape their portfolios to remain resilient to potential headwinds on the horizon, even as they actively pursue their ambitious growth objectives.”
In H1 2019, the chemicals sector had the highest deal value with $69.3bn due to the landmark Saudi Aramco-SABIC deal, followed by the oil and gas sector with $14.2bn. The provider care sector recorded $10.3bn, the banking and capital markets sector recorded $5.1bn in deal value, followed by the technology sector, which logged a deal value of $4.3bn, which included Uber’s $3.1bn acquisition of Careem Networks.
Anil Menon, MENA M&A and Equity Capital Markets Leader, EY, says: “MENA executives are relatively more optimistic about the improving economic prospects while still keeping an eye on evolving geopolitical risks. The EY CCB report found that MENA executives are proactively pursuing strategic options to strengthen competitive advantage and accelerate growth in an era where technology continues to disrupt traditional business models.”
H1 2019 saw an increase in domestic M&A activity in terms of deal value, with 111 deals amounting to $79.3bn, compared with 96 deals amounting to $5.5bn in H1 2018. Two mega strategic deals, as part of sector consolidation, drove the domestic activity by value — a chemicals sector deal in Saudi Arabia, worth $69.1bn and a deal in the banking and capital markets sector in the UAE, worth $4.0bn. .