Middle-east Arab News Opinion | Asharq Al-awsat

Saudi Aramco Has Largest Acquisition in the Region- EY | ASHARQ AL-AWSAT English Archive 2005 -2017
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The logo of Ernst & Young is seen at their headquarters in New York December 20, 2010. REUTERS/Lucas Jackson

Riyadh – London-based Ernst and Young (EY) issued its Mergers & Acquisitions (M&A) report of the first quarter of 2017 showing that activity in the Middle East and North Africa (MENA) region declined in terms of number of deals during the first quarter of 2017 with 84 deals compared to 115 deals in the same quarter last year.

Despite the slowdown in the number of deals, overall deal values remained stable reaching $18.2 billion in the first quarter of 2017, compared to $18.4 billion in the same quarter last year.

The outbound announced deal value increased substantially from $1.3 billion during the first quarter of 2016 to $9.3 billion in the same period this year, amounting to 636 per cent. Also, the announced inbound deal value rose significantly from half a billion dollars in the first three months of 2016 to $5.7 billion this year.

Domestic transactions fell by 83 percent in value terms during the first quarter of this year compared with the same period last year. The overall top ten deals contributed over 90 percent to the total deal value registered in the period within the MENA region.

EY’s MENA Transaction Advisory Services Leader Phil Gandier stated that as oil prices continue to stabilize, and government initiatives foster greater economic certainty, MENA executives will feel more optimistic that the economic conditions are right to return to deal-making.

“M&A pipeline has never been better, both quality and quantity. Furthermore, we expect the recent reversal of certain austerity measures in the GCC to result in more confidence in deal-making,” he added.

In the Middle East region, Saudi Aramco’s acquisition of a 50 percent stake in Malaysian state-owned energy company Petronas’ RAPID project for $7 billion was the largest deal of the quarter.

“Whereas the biggest technology deal of the quarter was the acquisition of Souq.com by Amazon for approximately $650 million. Amazon’s acquisition of Souq marks the company’s first move into serving the Middle East region,” Gandier added.

According to the latest EY Capital Confidence Barometer (CCB), a positive feeling about the global economy dominates the atmosphere over the executives from the region, with 47 percent expecting deal activity to increase in the next 12 month.

Gandier reported that 41 percent of the executives indicated they have five or more deals in the pipeline and 54 percent of MENA companies are ready to close deals over the next year.