Special Features
2010 MENA M&A Announced Deal Value Reached US $55.9 Billion, Up By 65% From 2009’s US $33.9 Billion
The total value of deals announced in the Middle East and North Africa (MENA) region grew by 65%, going from US $33.9 billion in 2009 to US $55.9 billion in 2010, according to Ernst & Young’s MENA M&A update. Total volume of announced M&A deals also increased from 2009 to 2010, going from 353 deals to 402 deals, a rise of14%.Meanwhile, total announced deal volume in Q4 2010 more than doubled from 2009 levels, increasing from 70 deals to 152 deals, a rise of 117%. Total announced deal value in Q4 2010 increased by three times compared to Q4 2009 levels, rising from US $5 billion in Q4 2009 to US $15.6 billion in Q4 2010, a rise of 212%.
Phil Gandier, Head of Transaction Advisory Services at Ernst & Young MENA said: “The fourth quarter accounted for the greatest deal volume in 2010, recording deals that were comparable to 2008 levels. Q4 witnessed five of the top 10 deals and the highest volume of deals in 2010. It also witnessed the year’s second highest value of deals at US$15.6 billion, following Q3’s US$21.7billion.”
Top deals of 2010
The top deal by value in 2010 was the Etisalat-Zain deal, valued at approximately $12 billion. Next in terms of value was General Organization of Social Insurance’s stake in Saudi Basic Industries Corporation, valued at US $3.6 billion, followed by Qatar Holding’s stake in Banco Santander, valued at US$2.7 billion.
While Ernst & Young recognizes recent developments in the media of Etisalat’s plans to discontinue talks with Kuwait’s Zain, our press release and annual 2010 report have included the Etisalat-Zain deal for the purposes of tracking all announced deals (and no closed deals).
Domestic sector leads in total value and volume
Announced domestic transactions comprised more than half of all deal volume in 2010, at 54%, followed by outbound deals at 29% and inbound deals at 17%. The domestic sector reigned in terms of deal value as well — largely due to the Etisalat-Zain deal — comprising 47% of total announced deal value in 2010. Outbound transactions closely followed with 45%. The inbound sector saw the lowest deal value activity at 8%.
Egypt and Kuwait lead domestic transactions
Of the total number of announced transactions in the MENA region in 2010, Egypt led with 47 deals, followed by Jordan with 31 deals, and Saudi Arabia with 30. Following Egypt was Saudi Arabia at 18% with deal value worth US $4.7 billion; and finally, the UAE at 9%, with deal value worth US $2.5 billion. Due to the Etisalat-Zain deal, Kuwait ranked highest in terms of announced deal value, worth approximately US $13 billion.
UAE leads in outbound transactions
The UAE was the top acquiring country in terms of volume of deals with 42 deals, which comprised 36% of total volume of outbound deals; following the UAE was by Qatar with 14 deals comprising 12% and Saudi Arabia with 13 deals comprising 11%. The UAE was also the top acquirer by value of deals, having acquired approximately US $10.8 billion worth of deals.
In terms of deal value from MENA, the United Kingdom ranked highest with deals worth US $5.2 billion; Brazil closely followed with deals worth approximately US$4.5 billion. Of the total number of announced outbound transactions in MENA in 2010, the United States ranked highest with 14 deals, followed by the UK, India and Turkey, with 12 deals each.
United States companies dominant acquirer of MENA assets
United States companies were the top acquirers by volume of deals in the MENA region in 2010, with 11 deals comprising 16% of total deal volume. American companies were also top acquirer in terms of value of deals in the MENA region, having acquired deals worth US $1.2 billion. Egypt attracted the largest disclosed inbound deal value worth US $1.3 billion; Egypt also ranked as the top target country for inbound deal activity, comprising 20 deals, or 28% of total announced deal volume.
Diversified Industrial Products and Banking & Capital Markets most attractive sectors
Within the announced outbound M&A deals in 2010, the most attractive sectors by volume were Diversified Industrial Products (15 deals), Banking & Capital Markets (14) and Consumer Products (13). Banking and Capital Markets saw the greatest share of deals from MENA, with approximately 38% of total announced deal value (worth US $9.4bn), followed by Consumer Products with 16% (worth US $3.9bn) and Diversified Industrial Products with 12% (worth US $2.9bn).
Private Equity and Sovereign Wealth Fund (SWF) activity was at its highest in terms of deal volume in Q1 and Q4 2010
Out of 402 announced deals in 2010, 87 deals were in the PE and SWF space, or 22% of total announced deal volume. By volume of deals in 2010, the sector that saw the greatest PE/SWF deal activity was Technology with 11 deals. Attractive sectors in terms of deal value in the PE/SWF space include Diversified Industrial Products worth approximately US $3.6bn, followed by Banking and Capital Markets worth approximately US $3.1bn.
Outlook
Gandier concluded: “Predictably, upcoming deal activity will be affected by the developments in the region. We hope to see M&A activity pick up again once the situation stabilizes. We expect financial services, manufacturing and industrials, consumer products, telecom and property to lead deal values in 2011.”
