Fertiliser deal boosts region's M&A activity

19 October 2015

UAE leads M&A, with high volumes in Iran, Egypt and Jordan

  • Regional M&A deals reach $11.2bn in third quarter of 2015
  • Volumes lifted by $8bn acquisition of Orascom’s Netherlands-based fertiliser business by a US firm
  • Third quarter activity up by 84 per cent on second quarter

An $8bn deal by US company CF industries to acquire Orascom’s Netherlands-based fertiliser business, OCI N.V., has boosted mergers and acquisitions (M&A) in the Middle East and North Africa to reach $11.2bn in the third quarter of 2015.

This represents an 84 per cent quarterly increase, according to the Zephyr quarterly M&A report.

However, the value of M&A deals in the first three quarters of 2015 is still only 7.5 per cent up on the same period in 2014. The number of deals has seen a steady increase of 56 per cent over the last five quarters to 182 in Q3 2015, according to Zephyr.

The second largest deal was the $562m sale of Damavand Petrochemical Company by Iran’s National Petrochemical Industries. This represents the return of the Iranian M&A market. It saw 9 deals in the third quarter worth $674m, compared to no deals in the same period in 2014.

The UAE saw the highest deal value in the region as the OCI sale was recorded there, despite its Egyptian history. There were 23 other deals targeting businesses in the country, worth just $104m. Transaction advisors in the UAE report being busy, but expect the deals they are currently working on to close in 2016.

Egypt and Jordan also attracted significant M&A business. Jordanian businesses attracted 49 deals, the highest number in the region, worth $591bn. Egyptian businesses were targeted in 38 deals worth $490m, although this was 74 per cent down on the deal value for the second quarter, according to Zephyr.

Saudi Arabia was the second largest M&A market in the GCC, recording 10 deals worth $508m.

Wholesale and retail trade, and chemicals, rubber and plastics, were the most important sectors thanks to the OCI deal, with $8.4bn and $8.2bn of deals respectively in Q3. Other than this, the most important sector was the primary sector, with deals worth $620m, a 65.5 per cent fall compared to the previous quarter.

The construction sector saw the highest number of deals, with 24 completed worth $550m, although the value dropped 26.2 per cent quarter on quarter.

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