Mena M&A Value Hits $30 Billion in H2 2016

The second half of 2016 was a record semester for mergers and acquisitions in the Mena region since 2013 with $30.5 billion in deals—almost three times the first half of the year, a report said.

Megadeals drove this exceptional activity with four transactions above $1 billion, stacking up to $24.2 billion, explained the new report “Mergers and Acquisitions in Mena” by A. T. Kearney, a global management consultancy, TradeArabia reported.

The largest transaction was in financial services. First Gulf Bank and National Bank of Abu Dhabi agreed on a merger worth $14.8 billion—creating the United Arab Emirates’ largest bank, First Abu Dhabi Bank, with assets of around $178 billion.

The remaining megadeals were in shipping and interest acquisitions in companies engaged in oil and gas concessions in Egypt and the UAE. However, the number of transactions dropped 53% compared with the first half of 2016 to reach the lowest level in the past four years with 76 transactions announced.

As the largest Mena financial investors seek opportunities mainly outside the region, corporate buyers have increased their share in the Mena M&A market. In the second half of 2016, corporations represented 82% of the Mena deals compared with 64 to 75% in previous periods.

International corporations were particularly active during this period with a record investment of $11 billion. The second largest transaction in the first half of 2016 is one example of corporations resorting to M&A to enhance competitiveness:

Hapag-Lloyd and United Arab Shipping Company announced a $5.4 billion merger to counter an industry-wide downturn caused by a faltering global economy and overcapacity of vessels. The combined company is expected to generate significant cost savings and optimize networks and infrastructure.

Mena investors maintained a healthy appetite for international M&A with 55 deals announced in the second half of 2016—24% less than in the first half of the year. However, in terms of value, the second half of the year recorded $17.8 billion—52% more than in the first half.

Financial investors, mainly (Persian) Gulf Cooperation Council sovereign wealth funds, have been instrumental in driving international M&A from a value perspective as they searched for enhanced and diversified financial returns.