The number of merger and acquisition deals (M&As) in the Gulf Cooperation Council (GCC) grew 39 percent year-on-year during the first quarter of 2019, according to a report released by Kuwait Financial Center (MARKAZ) on Saturday.
The Saudi market topped the Arabian Gulf markets in terms of M&As in Q1-19, in which the sector witnessed Aramco's 70 percent acquisition of SABIC in a deal worth USD69.1 billion.
In January, the Kuwait Finance House (KFH) said it gave initial approval for the average of stock exchange with AUB Bahrain at a rate of 2.33 shares of AUB’s in return for one share in KFH, added the report.
Abu Dhabi Commercial Bank (ADCB), listed on Abu Dhabi Securities Exchange (ADX), announced last month that its general assembly approved its merger with Union National Bank (UNB).
Italy’s Eni and Austria’s OMV will collectively acquire a 35 percent stake in ADNOC Refining for an estimated USD5.8 billion, whereby ADNOC will retain the remaining 65 percent stake in the company. KKR and BlackRock have acquired a 40 percent stake in ADNOC Oil Pipelines, an entity that will lease ADNOC’s interest in 18 pipelines for 23 years.
GCC acquirers accounted for 60 percent of the total number of transactions during Q1 2019 and 75 percent during Q4 2018. Foreign acquirers accounted for 34 percent of the total number of transactions during Q1 2019 and 17 percent during Q4 2018. Buyer information was not available for 6 percent of the transactions in Q1 2019.
Each of the GCC acquirers seemed to have a different appetite with regards to M&A transactions during Q1 2019.
Kuwaiti acquirers preferred investing in their home country. Saudi acquirers mostly invested in their home country and equally between other GCC countries and outside the GCC. UAE acquirers mostly invested outside the GCC and within their home country. Bahraini acquirers only invested outside the GCC. Qatari and Omani acquirers each engaged in one acquisition in their respective countries.
Q1 2019 witnessed a 70 percent increase in the number of completed transactions by foreign buyers compared to Q1 2018. In comparison to Q4 2018, the number of such transactions grew by 89 percent.
UAE targets represented 71 percent of the closed transactions by foreign acquirers during Q1 2019, while Saudi Arabia and Kuwait represented 23 percent and 6 percent respectively of the transactions during the same period. Bahraini, Omani and Qatari targets did not attract any foreign buyers during Q1 2019.
As per MARKAZ’s report, the industrial, financial and consumer sectors in the GCC accounted for 62 percent of M&As in the region during the first three months of 2019.
The media, insurance, telecommunication services and aviation sectors each accounted for 2 percent of the total closed transactions during Q1 2019, collectively amounting to 8 percent of the transactions during the period.
There was a total of 14 announced transactions in the pipeline during Q1 2019, representing a 27 percent increase in the number of announced transactions compared to Q4 2018.
UAE and Saudi Arabia collectively accounted for 79 percent of the announced transactions during Q1 2019. Oman and Qatar made up 21 percent of the announced transactions.
