UAE and Saudi Arabia set the pace in regional merger deals
The UAE and Saudi Arabia dominated the top 10 merger and acquisition deals in the Middle East and Africa last year, driven by energy and banking transactions.
More than half of the 10 biggest deals completed in the region in 2020 were in the Arab world’s two biggest markets, Mergermarket data shows.
The value and volume of the region’s M&A deals dropped in the past 12 months compared with a blockbuster 2019, according to the financial data provider.
The Middle East and Africa recorded 346 M&A transactions last year, a decrease of 30 per cent from 495 deals counted in 2019.
The value of deals in 2020 reached $ 96.9 billion, the region’s second-highest value on record, but down by nearly a third from $143.8bn in 2019.
Globally, the total fees investment banks earned for advising on M&A dropped 4 per cent to $31.2bn last year, the weakest annual period since 2016, according to data published last week by Refinitiv.
Looking ahead to 2021, however, merger activity around the world is expected to pick up again, including in mature industries, Pictet Asset Management said in a report titled Outlook 2021 Perspectives: Investment themes for the year ahead.
“The extremely low cost of funding and brightening economic outlook are major incentives for M&A,” Pictet said. “As companies and whole sectors respond to a fast-changing corporate and economic landscape, deal activity can be either offensive [takeovers by companies that want to expand their operations or gain new skills and resources to build market share in growing sectors] or defensive [ mergers in mature industries like European banking].”
M&A values in the Middle East and Africa during the third quarter of 2020 totalled $7.1bn, and was the lowest quarterly value since 2015, Mergermarket data showed. About 75 deals were completed in the region during that period, which was the lowest quarterly total in a decade.
Cross-border M&A suffered during 2020 owing to travel restrictions, it said. Regional foreign investment fell to $28.9bn across 159 deals, its lowest annual value since 2015.