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Mena M&A market surges ahead in 2014

The value of mergers and acquisitions (M&As) in the Mena region reached $50 billion and $41 billion respectively during 2013 and 2014, ahead of an average of $34 billion during the previous three years, a report said.

Such trend is reinstating the large deal sizes witnessed during the pre-2008 years, although the gap remains large to bridge, added the report on regional M&A activity for the full year 2014 released by Bureau van Dijk, one of the world’s leading providers of business and M&A intelligence and Mena Research Partners, a research outsourcing company.

The sustainable economic growth profile, driven by the large fiscal safety net, by the ongoing diversification away from hydrocarbons and by the progressive resurgence of key Arab Spring countries, is increasingly enlarging the depth and outlook for new deals in the region, the report noted.

From a geographic perspective, deal activity remains driven by a strong performance in GCC coupled with an ongoing pick-up in selected Arab Spring countries like Egypt and Morocco.

The GCC accounts for the bulk of the deals, with 44 per cent and 43 per cent respectively of the announced value and the volume of completed deals during 2014. This is compared to 69 per cent and 43 per cent respectively during 2013, in an indication of larger deals being closed outside GCC.

“The total number of merger and acquisitions (M&As) in the Mena region climbed significantly in the last three months of 2014, with 137 deals worth an aggregate $8.97 billon,” added Lisa Wright, a director at Zephyr, a global M&A database.

“However, around 45 per cent of this is attributable to a single high value deal, namely Fonds National d’Investissement’s $4 billion acquisition of Orascom Telecom Algerie, which completed in December. As is often the case, a large value transaction can transform a good quarter to an excellent one.”

Cyclical sectors continued to be a major focus for the acquirers. During 2014, sectors like banks, construction and service companies accounted for a substantial share of the regional completed M&As, prolonging the previous years’ trend.

Minority deals accounted for most of the number of the regional deals during 2014, sustaining their lead over the past years relative to majority deals. This is in line with the general perception that regional investors are less reluctant to give up control of their business.

Foreign acquirers have been one major component in the Mena M&As, the report said.

During 2014, they have accounted for 54 per cent of the number of completed deals, compared to 51 per cent during 2013, slightly below the average of 57 per cent witnessed during 2009 and 2010.

These numbers reflect a confidence of global players in a large number of regional economies and their long-term fundamentals. In return, it offers some interesting exit options for local investors, the report said.


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