Adnoc led the way with a slew of mega deals, but apart from that, M&A activity in the region was pretty muted. Image Credit: Gulf News Archive

Dubai: As global deal-making declines, merger and acquisition (M&A) values in the Middle East plunged 58 per cent in the first-half of 2020 compared to the same period last year. 

Activity in the region was driven by high-value deals such as Abu Dhabi National Oil Company’s $10 pipeline agreement with a consortium of global investors. UAE’s national energy firm struck a $20.7 billion deal with six investors, whereby the latter will invest $10.1 billion to acquire a 49 per cent stake in a newly created subsidiary.

But even then, market volatility caused by the COVID-19 pandemic led to a decline in the volume of deals, down 26 per cent from a year ago, according to according to data from law firm Baker McKenzie Habib Al Mulla.

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Apart from energy, consumer staples and industrials were the key categories that saw inward investment flows.

And despite the relative grim overall numbers, there are reasons to be optimistic.

An indicator

The “dramatic” increase in the value of deals during the first two months of 2020 showcases a “positive outlook” and an early recovery sign for M&A activity for the remainder of the year, said Omar Momany, Partner at the firm.

Outbound M&A activity from the Middle East dropped by volume... but increased in value. In all, there were 103 such deals valued at $5.42 billion in first-half of last year against 78 deals valued at $47.42 billion between January to end June this year.

“As the world begins to emerge from COVID-19, we can expect markets to begin to bounce back leading to more opportunities for investment, distressed M&As and consolidation within the region,” Momany said.

Key transaction trends

* Top 10 "acquirer" countries by value: US ($11.17 billion), Hong Kong ($3 billion), Mauritius ($1 billion), South Africa ($150 million), UK ($142 million), India ($133 million), Netherlands ($108 million), Singapore ($50 million), and Brazil ($8 million).

* Top 10 target countries by value: US ($3.57 billion), Egypt ($2.64 billion), UK ($514 million), Bermuda ($300 million), Germany ($180 million), Belgium ($98 million), Turkey ($93 million), India ($25 million), Malaysia ($1 million), and Romania ($100,000).