Mergermarket, the world’s leading news and intelligence service for mergers & acquisitions, has released its Global M&A Heat Chart that indicates potential future M&A activity based on companies that may be targeted for mergers or acquisitions. The Heat Chart suggests that the Middle East’s Telecoms, Media & Technology (TMT) sector could see the strongest levels of M&A activity in 2016, with 27 companies currently up for sale or likely to come to market. The UAE is likely to be the hottest regional market for TMT deals, with media houses and software development companies the most likely to be sold. The Heat Chart also shows that, in spite of low levels of Energy sector M&A in the region this year, there are a number of potential assets in the market that could drive more deals in 2016, albeit at low valuations.
Kirsty Wilson, Global Research Editor at Mergermarket, commented:
“Our data currently suggests that TMT in the UAE will lead regional M&A activity in 2016. Based on the last six months of research, we consider this to be a ‘hot’ sector, so it is no surprise that the highest valued UAE deal of Q1 was the US$ 292 million acquisition of e-commerce platform Souq.com by Standard Chartered Private Equity limited, Baillie Gifford and International Finance Corporation. We’re also expecting a relatively high level of activity in the Energy, Mining & Utilities sector, with 15 potential mergers and acquisitions in the pipeline.”
Lower performing sectors identified by Mergermarket’s Heat Chart included Transportation, in which only 6 potential deals have been identified, Construction, with only 4 potential deals anticipated, and Real Estate, with just 1 potential deal expected in 2016. Financial Services, along with Pharma, Medical & Biotech are projected to perform moderately, with 10 potential deals apiece.
EY, strategic partner at Mergermarket’s Middle Eastern M&A and Private Equity Forum, launched its 2016 Capital Confidence Barometer (CCB), which found that low oil prices have had little impact on M&A strategy as MENA companies fill their pipelines.
Phil Gandier, MENA Transactions Advisory Leader, EY, commented:
“According to our CCB, which gauges corporate confidence and how companies manage their capital agendas, 37% of MENA executives expect to actively pursue acquisitions over the next 12 months. Although low oil prices are having a varying impact on MENA countries economically, they are having little impact on M&A strategy as MENA executives continue their steadfast pursuit of deal-making. We expect disruptive trends, such as changes in consumer behaviour and transformational deals that enable MENA companies to adapt to shifting customer sentiment, to dominate M&A activity in 2016.”
On the subject of cross-border M&A in the Middle East, Jayshree Gupta, Partner at Baker & McKenzie, commented:
“Over the past six months, we have seen a noticeable uptick in cross-border mandates involving the Middle East with the most prominent sectors being TMT, consumer/food and industrials. Most transactions involve more than two Middle East countries. The UAE, Saudi Arabia and Kuwait have been the busiest for the GCC, and it’s exciting to also see more complex technology projects and more know-how come into the region. Client sentiment appears to be strengthening, which bodes well for the remainder of 2016.”
Mergermarket’s 2016 Middle Eastern M&A and Private Equity Forum was attended by leading MENA transaction professionals, who examined deal trends in the region and shared ideas on the outlook for M&A in the Middle East. The Forum was hosted in strategic partnership with Baker & McKenzie, EY, Standard Bank and Instinctif Partners. The Forum is followed by Mergermarket’s inaugural Middle Eastern M&A Awards, which recognise transaction advisory achievements across a range of sectors including Consumer, Mining & Utilities, Industrials & Chemicals, Medical & Biotech, Real Estate, and Financial Services.