Middle East M&A 2009 volume drops 39%, value rises 13%
Posted by BusinessIntelligence Middle East
Source: BI-ME , Author: BI-ME staff
Posted: Wed January 20, 2010 11:49 am


INTERNATIONAL. There has been a slight increase in annual deal value of Middle East M&A despite a decline in volume, according to the latest mergermarket Middle Eastern M&A Round‑up.

After a quiet kick-off in 2009, M&A activity picked up sharply in the second half of the year, with an overall value of US$17.9 billion, 13% higher than in 2008.

Despite a strong finish in the last quarter of 2009 with 40 deals, a 100% increase on the 20 deals recorded in first quarter, the overall count for the year was down to 107 announced deals from 176 in 2008, a drop of 39%.

Foreign M&A investment reached its lowest point since 2005, with outbound M&A activity valued at US$17.3 billion on 57 transactions, down 57% compared to 2008.

Inbound activity followed the same downward trend, with 35 announced deals, down from 64 in 2008, a decline of 45%. At US$2.7 billion, deal values were also in sharp decline, 60% compared to 2008.

Morgan Stanley and Shearman & Sterling top league tables

Morgan Stanley, ranked 12th by both value and volume in 2008, topped the 2009 rankings having advised on nine deals with a total value of US$10 billion.

The US firm was well ahead of Deutsche Bank (US$6.6 billion) and Bank of America Merrill Lynch (US$5.8 billion). UBS, the most active firm in 2008 in the region, fell to sixth in the volume rankings.

Shearman & Sterling topped the legal advisory tables, by both value and volume, with ten transactions valued at US$14.3 billion, including five of the top 10 deals for 2009.

The New York based firm had ranked third by both value and volume in 2008. Allen & Overy, its UK based competitor which held top spot in 2008, ranked fourth by value and second in the volume table.

Outlook for 2010

The global economic turmoil in 2009 did not escape the Middle East region. RBS added the UAE and Bahrain to a group of developing economies considered most at risk of a debt crisis - especially after the announcement of the US$22 billion debt by state-owned conglomerate Dubai World.

However, the situation in the region is expected to stabilize after the US$25 billion financial support provided by the Abu Dhabi government, the UAE central bank and two Abu-Dhabi based banks.

The public markets were the venue for many of the Gulf region’s most significant announced transactions in 2009 – including the acquisition of a 50% stake in Iran Telecom for US$7.8 billion.

But many deals have been slow to come to fruition. Barwa’s merger with QREIC was revealed in mid-January 2009, but it was not until January 2010 that the initial terms of the deal were announced.

Some transactions have also lapsed over time. The acquisition of Dragon Oil for US$1.1billion was cancelled last December, while the biggest expected deal in 2009, the proposed sale of a 46% stake in Kuwait-listed telecom Zain for a record US$13.7 billion, has faltered as the consortium of sellers appear to have jumped the gun and announced the transaction before the details had been finalised.

These lapsed transactions represent a good prospective M&A stream for the Middle East. Indeed, the targets are still on the market and will attract the interest of potential bidders in the coming year.


News Link: http://www.bi-me.com/main.php?id=43590&t=1&c=34&cg=4&mset=1011