M&A activity in Middle East jumps four fold in H1 2019: report

Merger and acquisitions (M&A) in the Middle East surged 284 percent year-on-year in value in the first half of 2019, primarily driven by Saudi Aramco’s announced $70.4 billion acquisition of a 70 percent stake in petrochemical firm Saudi Basic Industries (SABIC), White & Case, an international law firm, said in a recent report.

However, the number of transactions in the Middle East fell 15 percent to 112, though this was a less sharp decline than the 21 percent global drop in volume, it noted.

Other large deals included Abu Dhabi National Oil Company’s (ADNOC) sale of a 40 percent stake in its pipeline unit to US PE firms KKR and BlackRock in February for $4 billion.

Meanwhile, the low oil price has helped sustain M&A in the financial services sector.

“Many banks see M&A as a natural response to these pressures, since the banking sector is highly fragmented in most countries in the region,” the report added.

As a result, the financial services sector registered a 502 percent rise in deal value in H1 2019 to $5.3 billion on H1 2018, though the number of deals fell from eight to six. 

In March, global ratings agency Fitch predicted that M&A activity in Middle Eastern banking would remain “red hot” in 2019. 

“The pace has not, since then, been frenetic, but this is probably a mere matter of timing because of the pressures on banks to merge,” the law firm said.