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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Q1 M&A activity down, deal value remains firm

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Business Reporter -


MUSCAT, MAY 10 -


MENA M&A activity declined in Q1 2017 recording 84 deals, compared to 115 deals in Q1 of 2016, according to EY’s Q1 2017 M&A report. However, MENA deal values remained broadly stable reaching $18.2b in Q1 of 2017, compared to $18.4b in Q1 2016.


The outbound announced deal value increased substantially by 636 per cent from $1.3b in Q1 2016 to $9.3b in Q1 2017. Furthermore, the announced inbound deal value also rose exponentially from $0.5b in Q1 2016 to $5.7b in Q1 2017.


On the contrary, the announced deal activity value for domestic transactions witnessed a significant decrease of 81 per cent in Q1 2017 compared with Q1 2016. Within the MENA region, the overall top ten deals contributed over 90 per cent to the total deal value registered in the period.


Phil Gandier, MENA Transaction Advisory Services Leader, EY, says, “As oil prices continue to stabilise, and Government initiatives foster greater economic certainty, MENA executives are feeling more optimistic that the economic conditions are right to return to deal making. Consequently the M&A pipeline has never been better - both quality and quantity. Furthermore, we expect the recent reversal of certain austerity measures in the GCC to result in more confidence in deal making.”


In the region, Saudi Aramco’s acquisition of a 50 per cent stake in Malaysian state-owned energy company Petronas’ RAPID project for $7b was the largest deal of the quarter. The biggest technology deal of the quarter was the acquisition of Souq.com by Amazon for approximately $650m. Amazon’s acquisition of Souq marks the company’s first move into serving the Middle East region.


Executives in the region are feeling more positive about the global economy, with 47 per cent expecting deal activity to increase in the next 12 months, according to the latest EY Capital Confidence Barometer (CCB). Furthermore, 41 per cent indicate they have five or more deals in the pipeline, with 54 per cent of MENA companies looking to close deals over the next year.


However, MENA executives expect a slowdown in global trade flows and an increase in protectionism, high fluctuation in currencies and capital markets, and increasing geopolitical uncertainty as significant economic risks. Market fluctuation and lower oil prices have 54 per cent of MENA executives looking at organic opportunities first to meet growth objectives.


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