Middle East Chemicals & Industrials Drive Record Q1 M&A Deal Value
Mergermarket, the leading provider of M&A data and intelligence, has published its Q1 2017 M&A Brief for the Middle East. The report shows that the Middle East has benefitted from foreign and domestic investment in Industrials & Chemicals, with the sector driving first quarter M&A to reach its highest value in eight years (16 deals, worth US$ 5.5 billion), increasing 61.8% compared to the final quarter of 2016 (19 deals totalling US$ 3.4 billion). Mergermarket’s MENA Mergers 2017 forum will take place in Dubai on 8th May.
Record value was driven by two sizeable deals of over US$ 1 billion, including US-based Tronox Limited making a US$ 2.2 billion acquisition of Saudi Arabia’s National Titanium Dioxide Company, accounting for 40% of total regional M&A value. As a consequence, the Industrials & Chemicals sector was the most targeted, representing 55% of total Middle East deals, with total value hitting US$ 3 billion across just three transactions. The second largest deal of the quarter was the US$ 1.1 billion acquisition of a 19.83% stake in Arab Bank Group (Jordan) from Saudi Oger Limited, by a group of investors led by Sabih El-Masry.
Ruth McKee Al Ghamdi, Head of Mergermarket MENA, commented: “Amid an era of low oil prices and falling company revenues, MENA M&A is expected to be driven by businesses looking to reduce costs and increase revenue from greater market shares. Most deals are expected to be mid-cap in size with most activity likely to be in UAE, Saudi Arabia and Egypt. There is also an increasing buyout appetite for the technology sector, and this will only have been bolstered by the recent US$ 650 million acquisition of the UAE’s Souq.com by Amazon.com.”
Other top deals included Saudi Basic Industries Corporation’s (SABIC) acquisition of a 50% stake in Saudi Arabia Petrochemical Co. from Royal Dutch Shell Plc for US$ 820 million, as well as Amazon.com’s acquisition of the UAE’s Souq.com for US$ 650 million. Citi led Mergermarket’s Q1 financial advisor league table by value, advising on deals totalling US$ 3.9 billion, while Lazard led deal count, completing two deals worth US$ 1.7 billion in total. Baker McKenzie led the legal advisory deal count table for the first quarter, advising on three deals worth a total of over US$ 1.1 billion.
Borys Dackiw, Co-Managing Partner and Head of UAE Corporate/M&A Practice, at Baker McKenzie Habib Al Mulla, commented: "It's encouraging to see that despite sustained political turbulence, dealmakers in the region have remained resolute. The Middle East has fared well for both domestic and cross-border deal flow, as seen in Baker McKenzie's recent Cross-Border M&A Index Report, reflecting a positive outcome for M&A activity in the region for the first quarter of 2017. With continual GDP growth predicted in key Middle Eastern countries, we expect to see more overseas investors looking at their options in the region.”
Phil Gandier, Transaction Advisory Services Leader at EY MENA, said: “The M&A pipeline for full year 2017 continues to be strong in spite of market uncertainty and low oil price headwinds. We believe this is an opportune time for industry shaping transformational deals. Amazon’s acquisition of Souq and Tronox’s acquisition of the titanium dioxide business of Cristal are good examples of the type of transformational deals we will see in 2017. Inbound investment and sector consolidation will be the key drivers for MENA M&A."
Mergermarket’s upcoming MENA Mergers 2017 forum will be attended by leading MENA transaction professionals, who will examine deal trends in the region as well as share ideas on the outlook for M&A in the Middle East. The Forum will be hosted in strategic partnership with Baker McKenzie, EY, Standard Bank, AIG, Instinctif Partners and iDeals Solutions. The forum will be followed by Mergermarket’s second annual Middle Eastern M&A Awards, which will recognise transaction advisory achievements across a range of sectors including ‘Energy, Mining & Utilities’, ‘Financial Services’, ‘Consumer’, ‘Pharma, Medical & Biotech’, ‘Telecoms, Media & Technology’ and ‘Industrials & Chemicals’.
