Dubai: The value of mergers and acquisitions in the Middle and North Africa region is expected to fall to $19.9 billion (Dh73 billion) in 2015, from $27.07 billion in 2014, Andrew Schoorlemmer, Middle East head of corporate at international law firm Allen and Overy, said on Thursday.
The region has seen 168 deals so far this year compared to 220 in 2014, with the majority in the health care, technology, media and telecommunication sectors.
Despite geopolitical and economic problems faced by the region, such as lower oil prices, the mergers and acquisitions market has not been under pressure, according to the firm.
“In the Middle East in 2015, geopolitical and economic events including declining oil prices did not seem to destabilise the M&A market as much as might have been expected. This may be a sign that investor confidence remains strong, or that companies and private equity houses are seeking alternative markets in which to invest, for example, Africa,” Allen and Overy said in its M&A Insights Report published on Thursday.
The UAE is among the top 20 most active global outbound acquirers in the current quarter, with the current value of completed deals at $11.9 billion, Schoorlemmer told Gulf News by email.
On his outlook for the mergers and acquisitions market in 2016, Schoorlemmer said: “We expect some continued tightening of belts by those who are reliant on hydrocarbon revenues, but increasing amounts of mergers and acquisitions activity by those keen on exploring and investing in new markets, including the bigger international private equity firms.”
Sectors
Globally, the value of mergers and acquisitions rose 22 per cent from 2014 to reach $4 trillion. However, the volume of deals dropped 13 per cent year-on-year. Around one third of all deals this year were cross-border.
Merger and acquisition activity this year has been driven by “continued strong economic conditions and the availability of cheap debt and financing,” Allen and Overy said in the report.
The technology, media and telecommunications sectors accounted for 25.7 per cent of deal values, while the life sciences sector represented 21 per cent.
The United States was involved in 62 per cent of the 131 deals valued at more than $5 billion.
Asia follows the United States and overtakes western Europe as the second most active merger and acquisition market, as Chinese companies get involved in outbound acquisitions. Big brands and technology companies are attractive targets for these companies.
Allen and Overy said it expects to see more mid-size mergers and acquisitions in 2016.
