The M&A first quarter of 2018 has already witnessed deals of significant value in the insurance, medical, and education sectors, according to M&A data and intelligence provider Mergermarket.
The largest deal of the quarter was Total’s investment into the Umm Shaif and Nasr fields and Lower Zakum off-shore concession for a combined $1.45 billion.
In line with global trends, pressure from shareholders seeking gaining market share pushed companies towards defensive consolidation through M&A. Domestic deals recorded 13 deals worth $2.5 billion, driven by the acquisition of a 53.37 per cent stake in Moroccan insurance firm Saham Finances for $1.05 billion by Sanlam and its general Insurance subsidiary, Santam, the highest quarterly value for the region on since Q1 2017, $2.6 billion.
This year, the MENA region has reached its highest Q1 deal value since 2001, as per Mergermarket’s records, with $9.3 billion invested in the region across 33 deals so far.
“Middle East deal activity over the past few years have been very robust. Deal volumes in both 2016 and 2017 remained consistent despite a drop in deal value in 2017, with the UAE continuing as the most attractive market for inbound investment last year. Baker McKenzie's Global Transactions Forecast with Oxford Economics predicted an uplift in M&A activity in 2018 globally and in the Middle East, and with the apprehension of 2017 easing and the underlying strategic drivers for investment remaining steady, we expect M&A levels in the Middle East to remain healthy throughout 2018 and to peak in 2019,” said Omar Momany, Head of the UAE Corporate & Commercial Practice at Baker McKenzie Habib Al Mulla.
In 2017, the MENA region saw a decline of 57.6 per cent in deal value, despite deal count maintaining a level that was consistent with the previous year. 2017 saw the announcement of a total of 126 deals worth approximately $16.0 billion, compared to 129 deals in 2016 at a total value of $37.8 billion.
“We expect a busy summer and an active M&A market in FY18. The primary drivers will be private equity players who are net sellers, sector consolidation plays, and regional family businesses who continue to reconfigure their business portfolios,” said Anil Menon, MENA M&A Leader, EY.