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Middle East M&A Update Q3'18

Companies and Markets

By Houda Bouhayat  |  January 3, 2019

The economic stabilization of the Middle East and North Africa continued in Q3. The GCC countries, mainly UAE and Saudi Arabia, are still working actively on economic diversification and Dubai is busy preparing for the Universal Expo 2020. This event should boost the region even more. However, the region is still vulnerable to the fluctuations of oil prices and geopolitical risks.

The stabilization is also noticeable in the M&A market, were the number of transactions dipped only slightly in Q3 with 43 deals closed in Q3 2018, 12% less than previous quarter.

MEA Deal Volume-1

The total disclosed transaction value of Q3 2018 remains compared to Q2 2018 with a slight slowdown of 4%.  

 MEA MA Transaction Value

Looking at the last five years, this last quarter registered the highest total disclosed transaction values since 2015, with a total of $8.2 billion.

MEA MA Trends Five Year

Sector Performance

Ranking the sector by deals value, Energy Minerals comes in first with $ 4.8 billion split across four deals. Industrial Services sector was second with $1.7 billion across three deals, and the third position was filled by the Transportation services sector with $988 million across six transactions.

ME MA Value and Volume by Sector

Largest Transactions of Q3 2018

The largest transaction completed in Q3 2018 was between a Qatar Investment Authority and Glencore Plc.

Qatar Investment Authority acquired an additional 9.18% from Glencore Plc for $4.4 billion. Following the transaction, Qatar Investment Authority now holds an equity stake of 18.93% while Glencore retains a 0.57% stake in Rosneft. Rosneft Oil Co is based in Moscow and engages in exploration, development, production, and sale of crude oil and gas, petroleum products, and petrochemicals. The transaction was subject to customary closing conditions, including regulatory approvals, and was expected to be completed in the second half of 2018.

The second largest deal occurred between Wren House Infrastructure Management Ltd, a Kuwait government owned private equity company and North Sea Midstream Partners Ltd, a portfolio company of ArcLight Capital Holdings LLC for an undisclosed amount. The deal was reportedly valued at around $1.7 billion. Founded in 2012, North Sea Midstream Partners Ltd is located in London, and owns and operates midstream oil and gas infrastructure assets. The deal was subject to merger control clearance and is expected to close in 2018. Upon closing of the deal, there will be no changes to either North Sea Midstream Partners Ltd's management team or the operation of its assets by the px Group. The transaction was approved by the European Commission on September 17, 2018.

The third largest deal was closed between American Express Global Business Travel (Owned by the Qatar Investment Authority) and Hogg Robinson Group Plc for $ 550 million in cash. Under the terms of the transaction, shareholders of Hogg Robinson Group Plc would receive $1.7 in cash for each share held, representing a 53.85% premium to the closing stock price of Hogg Robinson Group Plc on the latest practicable date. Funding for the transaction will be through a line of credit provided by Morgan Stanley Senior Funding Inc and internal resources. The acquisition complements and expands the market presence of both Hogg Robinson Group Plc and American Express Co.

Target Countries

The target country that has registered the highest number of deals in Q3 2018 is the UAE with 12 deals this quarter valued at a total of $493.5 million. 

MEA MA Target Country Deals and Value

Inbound transactions represent 21% of the total transactions of the quarter. With a total disclosed transaction value of $100 million. The UAE came in first with six deals closed this quarter.

In Q3 there were also 34 outbound deals. The UAE again came in first with six deals, followed by the UK with five deals, and France with three.

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Houda Bouhayat

Senior Client Consulting Manager, MEA IM Consulting