Regional M&A activity picks up steam

After a lacklustre first half, mergers and acquisition (M&A) activity in the Middle East has gathered momentum once again.

After trailing more than 62 per cent in H1 2009 compared with H1 2008 ($3.7 billion [Dh13.5bn] versus $10bn), the second half (until November 20, 2009) has witnessed M&A deals worth $16.2bn being undertaken in the Middle East, according to Mergermarket data.

The H2 (YTD) numbers surpass the $15.8bn worth of deals that were undertaken in the whole of 2008.

Worth a shade more than $20bn, Middle East mergers and acquisition deals in 2009 (year-to-date) stand at 26.5 per cent over the 2008 entire-year figure, with another five or so weeks to go before the year-end.

Qatar Petroleum International's estimated $1bn deal for a 25 per cent stake in Petrochemical Corporation of Singapore was the largest deal of the previous fortnight, followed by UAE-based Aabar Investment and German carmaker Daimler's acquisition of a 75.1 per cent stake in the United Kingdom-based formula one team Brawn GP, for an estimated $211 million.

According to M&A research firm Mergermarket, technology, media and telecommunications (TMT) has been the most active sector for deal-making in the Middle East this year, with more than three-fourths (70.1 per cent) of deals by value and almost a quarter (24.7 per cent) of deals by volume involving entities from this sector.

A thawing in the global and regional financial markets implies that M&A activity could gather further steam in the weeks and months ahead.

Analysts believe that big-ticket M&As will be the order of the day in 2010 as shareholders resume sales of companies that were put on hold during the peak of the financial crisis.

Globally, M&A volumes are down 34 per cent while cross-border M&As are down 54 per cent, according to Thomson Reuters data, with $1.8 trillion worth of deals being undertaken this year (until November 19).

Graphic: Middle East M&A Activity - Quarterly

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