The giant outcome of Aramco, Uber on M&A Landscape of MENA

Source: reuters.com
  • A staggering 220% jump has been recently observed in MENA tertiary in the overall Merger and Acquisition deals at $115bn during the first six months within 2019.
  • MENA (Middle East and North African) tertiary in first quarter of 2019 has witnessed a massive growth in value of deals with the support of Saudi Aramco’s agreement to buy a 70 percent stake in SABIC for over $69 billion, driving it to have a staggering 220 percent surge in Merger and Acquisition deals stake.

As per the report stated by EY, the tertiary witnessed a huge shot up in the overall merger and acquisition deals to be at $115.5 Billion, a surge from $36 billion during 1st quarter of 2018.

However, the deal volumes witnessed a slump of 10.7 percent, as it witnessed only 216 announced deals during H1, which had slumped from 242 transactions recorded in the previous year.

In H1, state-owned entities were concerned in 55 deals (25 percent of total transactions) amounting to $104.5 billion, that represented ninety percent of the full deal price, together with mega-deals involving Saudi Aramco, ADNOC and ADIA.

Matthew Benson, MENA’s transaction consolatory services leader, EY, stated: “MENA corporates are finding innovative ways in which to lift capital and have stepped up the frequency of their portfolio reviews. With a lot of frequent portfolio reviews, many non-core businesses are put aside for divestment, thereby provisioning the deal activity.”

He also added to the statement: “Looking ahead, they tend to expect MENA firms to reshape their portfolios to stay resilient to potential headwinds on the horizon, while they actively pursue their bold growth objectives.”

In H1, the chemicals sector had the highest deal price thanks to the landmark Saudi Aramco–SABIC deal, followed by the oil and gas sector whereas the technology sector conjointly logged a deal price of $4.3 billion, including Uber’s $3.1 billion acquisition of Careem Networks.

Anil Menon, MENA M&A and equity capital markets leader, EY, stated: “MENA executives are comparatively a lot of optimistic concerning the rising economic prospects whereas still keeping a watch on evolving government risks. MENA executives are proactively following strategic choices to strengthen competitive advantage and accelerating the growth in an era wherever technology continues to disrupt ancient business models.”

The first six months of 2019 conjointly saw a rise in domestic M&A activity in terms of price, with 111 transactions accounting to $79.3 billion, compared to ninety-six transactions accounting to $5.5 billion in H1 2018.

Also, MENA witnessed 65 outward-bound M&A deals amounting to $21 billion compared to seventy-seven sales amounting to $18.2 billion a year ago.

The EY report aforesaid the UAE was hierarchic the very best in terms of incoming M&A investment within the region, with twenty deals amounting to $14.4 billion. “The massive sums of incoming M&A reinforce the MENA investment thesis. We tend to still believe that these are sensitive times for strategic acquisitions in MENA,” Mr. Menon additionally stated.