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Mideast M&A value soars
Rohma Sadaqat / 4 May 2013
DUBAI - The total value of mergers and acquisitions, or M&A, targeting companies based in the Middle East soared in April 2013 to $1,770 million from the $347 million recorded in March, according to the latest report from Zephyr, the M&A database published by Bureau van Dijk.
The report also revealed that while the value of the deals in the Middle East were recorded as being five times higher over the four weeks under review, deal volume slumped 60 per cent to a new 12-month low of 18 deals.
“The significant rise in total deal values when compared to last year indicates an increased level of confidence in the Middle East M&A markets and that there may be more promising quarters ahead. This should be spurred on by improved confidence in the global economy and the increasing ability of regional investors to factor in political instability around some areas of the Mena to their deals and still get the deal done,” said Phil Gandier, Mena head of Transaction Advisory Services at Ernst & Young.
The largest M&A deal by value in April involved Kuwait’s largest Islamic lender, Kuwait Finance House, or KFH, diluting its equity base by way of a capital increase representing a 17 per cent stake worth $1,017 million and which accounted for 57 per cent of the Middle East’s total value.
This was the only transaction valued at more than $1,000 million and the only one to target a Kuwait-based company. While the top three deals by value targeted financial institutions, second- and third-placed Arab Bank of Jordan and Ahli United Bank, respectively, involved shareholders cashing in on their investment rather than the lenders raising money in cash calls.
The report further revealed that investment in Kuwait increased over the four weeks to $11 million recorded in April from the $6 million in March. Jordan was the only other Middle East-based target that also improved in monetary terms over the same time frame. While Kuwait was the main target by value, investment favoured the UAE in terms of volume as seven deals were signed off in the country over the four weeks, ahead of Jordan with five and Saudi Arabia with two.
Kuwait, Bahrain, Oman and Qatar were all targeted for one deal apiece, but it was Jordan that was worst off over the four weeks under review as investment in the country fell 83 per cent from 30 deals in March.
In a 12-month comparison, the volume of investment in UAE-based companies rose from five deals in April 2012 while that targeting Jordan, Kuwait and Bahrain remained level. Excluding Yemen and Iraq, which were not involved in any M&A deals in April 2012 or 2013, investment in the remaining countries weakened.
There was significant foreign investment in the Middle East in April as six of the month’s 18 deals had acquirors either based or incorporated outside the region. The largest of these was worth $17 million and involved International Dairy & Juice, a Bermuda-incorporated venture between Almarai and PepsiCo, buying the remaining 15 per cent stake it did not already own in Teeba Investment for Developed Food Processing of Jordan. Other countries featuring as acquirors ranged from India, China, Singapore, Hong Kong and the UK.
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