Middle East Chemicals & Industrials Drive Record Q1 M&A Deal Value

  • Middle East M&A benefits from US investment in Industrials & Chemicals sector
  • Two major deals led M&A deal value to reach eight year high of US$ 5.5 billion
  • Overall Q1 2017 deal value increased 61.8% compared to Q4 2016

Mergermarket, the leading provider of M&A data and intelligence, has published its Q1 2017 M&A Brief for the Middle East. The report shows that the Middle East has benefitted from foreign and domestic investment in Industrials & Chemicals, with the sector driving first quarter M&A to reach its highest value in eight years (16 deals, worth US$ 5.5 billion), increasing 61.8% compared to the final quarter of 2016 (19 deals totalling US$ 3.4 billion).  Mergermarket’s MENA Mergers 2017 forum will take place in Dubai on 8th May.

Record value was driven by two sizeable deals of over US$ 1 billion, including US-based Tronox Limited making a US$ 2.2 billion acquisition of Saudi Arabia’s National Titanium Dioxide Company, accounting for 40% of total regional M&A value. As a consequence, the Industrials & Chemicals sector was the most targeted, representing 55% of total Middle East deals, with total value hitting US$ 3 billion across just three transactions. The second largest deal of the quarter was the US$ 1.1 billion acquisition of a 19.83% stake in Arab Bank Group (Jordan) from Saudi Oger Limited, by a group of investors led by Sabih El-Masry.

Ruth McKee Al Ghamdi, Head of Mergermarket MENA, commented:“Amid an era of low oil prices and falling company revenues, MENA M&A is expected to be driven by businesses looking to reduce costs and increase revenue from greater market shares. Most deals are expected to be mid-cap in size with most activity likely to be in UAE, Saudi Arabia and Egypt. There is also an increasing buyout appetite for the technology sector, and this will only have been bolstered by the recent US$ 650 million acquisition of the UAE’s Souq.com by Amazon.com.”

Borys Dackiw, Co-Managing Partner and Head of UAE Corporate/M&A Practice, at Baker McKenzie Habib Al Mulla, commented:”It’s encouraging to see that despite sustained political turbulence, dealmakers in the region have remained resolute. The Middle East has fared well for both domestic and cross-border deal flow, as seen in Baker McKenzie’s recent Cross-Border M&A Index Report, reflecting a positive outcome for M&A activity in the region for the first quarter of 2017. With continual GDP growth predicted in key Middle Eastern countries, we expect to see more overseas investors looking at their options in the region.”

Phil Gandier, Transaction Advisory Services Leader at EY MENA, said:“The M&A pipeline for full year 2017 continues to be strong in spite of market uncertainty and low oil price headwinds. We believe this is an opportune time for industry shaping transformational deals. Amazon’s acquisition of Souq and Tronox’s acquisition of the titanium dioxide business of Cristal are good examples of the type of transformational deals we will see in 2017. Inbound investment and sector consolidation will be the key drivers for MENA M&A.”