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Report: decline in the value of deals in the Middle East

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Report: decline in the value of deals in the Middle East

November 22, 2015 0

Ernst & Young report revealed that the activity of mergers and acquisitions announced in the Middle East and North Africa deals has dropped by 13% to 91 deal the third quarter of this year, compared with 104 deals in the third quarter of last year.

The report, which received "our economy," a copy of it: that the value of deals fell from $ 8.5 billion in the third quarter of 2014, to $ 5.4 billion for the same period of this year dropped by 37%.

Said Phil Gandhir, head of Transaction Advisory Services in EY Middle East and North Africa: "index indicates EY semi-annual report to the confidence of the capital in the Middle East and North Africa to the quiet confidence in the regional and global economic outlook, despite continued pressure on oil prices during 2015 .

It seems that the optimism about the prospects for the economy in the Middle East and North Africa region has been established since April 2015. The survey shows that 18% of participants from the Middle East and North Africa believe that the regional economy is moving according to a strong recovery path, compared with only 6% believed that in April 2015.

There is an implicit feeling that corporate managers believe that the economies that depend on oil and gas has been able to weather the storm. It seems that the government remains committed to major projects, most of which have sufficient reserves to overcome the deficit in the budget for a few years from now. "

And it saw the incoming and outgoing transactions in the Middle East and North Africa increased by 40%, for up to 63 transactions in the third quarter of 2015, compared with 45 transactions in the same period of last year. While domestic deals fell from 59 transactions in the third quarter of 2014, to only 28 deals in the third quarter of 2015.

He said Anil Menon, president of consulting mergers and acquisitions IPO in EY Middle East and North Africa deals Services: "It is clear that the state of uncertainty that has dominated the macroeconomic and leave summer extended because of the large number of holidays in the region, reflected on the activity of local deals in the third quarter of the year ongoing.

However, there is compelling evidence that mergers and acquisitions activity in the Middle East and North Africa region remains strong. 71% of respondents predicted in opinion questionnaire from the region that their transactions will increase in the next year, compared with 56% supported this view in April 2015.

The most obvious improvement when participants from the United Arab Emirates, where the predicted 70% of respondents from the UAE improvement in deal activity, compared with only 14% in April 2015. "

Chemicals and consumer products sectors dominated health care on the activity of cross-border transactions. And has the largest merger and acquisition in the third quarter of 2015 during the month of September, where Saudi Aramco acquired a 50% stake in the German company "Lanxess AG" specialized in synthetic rubber, in a deal worth US $ 1.7 billion.

Anil said: "The capital confidence survey an important indicator of a dynamic sector. Activity allocation of capital in the oil and gas sector clearly from upstream to downstream industries Industries has moved. We expect to see a greater number of transactions in the petrochemical sector during the remaining months of 2015. "

Egypt has emerged as an attractive destination for foreign investors over the past year. US Kellogg giant Foods has acquired two Egyptian companies in 2015, two Bisco Misr Biscuit Industries Inc., a deal valued at US $ 150 million in January, the largest producer of breakfast cereals in Egypt, Mass Food Group, a deal valued at $ 50 million per month September.

The acquisition of these two deals reflect a greater willingness among foreign companies to take advantage of non-organic growth as the best approach to install a foothold in an important growth market has a suitable composition of the population.

He added Phil said: "Egypt has clearly benefited, as a net importer of oil, the decline in oil prices realized strong growth of GDP rate of 4.2% until June of 2015.

This led to a significant increase in the number of participants in the study of Egypt, who saw that the domestic economy is improving modestly, where these proportion rose from 27% six months ago to 47% in October 2015, according to the survey of capital trust. "

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