(MENAFN - Arab News) Saudi Arabia, the UAE and Qatar have captured 78 percent of the deal value of the domestic mergers and acquisitions (M&A) announced in MENA region in the first quarter of 2012, according to a report by Ernst & Young.
The UAE topped the region in terms of total value, comprising approximately 29 percent of total domestic disclosed deal value worth 445 million, followed by Qatar at 29 percent of total domestic deal value worth 439.6 million, and Saudi Arabia at third position with 20 percent of deal value worth 304 million, the report said.
Overall, mergers and acquisitions in the Middle East and North Africa (MENA) dropped by 40 percent to 8.5 billion during the first quarter of 2012 compared to 14.1 billion during the corresponding period last year, the report said.
Q1 2012 compared to the last quarter of 2011 to hit 7.2 billion, the report said.
The volume of M&A deals increased by 7 percent, from 98 deals last year to 105 deals in the first quarter this year, it said. However, the average announced deal size was 242.9 million, down 34.7 percent from 372.1 million last year, according to the report.
Meanwhile, Phil Gandier, MENA head of transaction advisory services at E&Y said: "We are still seeing a level of caution in the regional markets. Overall, the positive news from the Q1 2012 M&A numbers is that the start of this year has been better in comparison to the start of 2011."
"A total of 19 sovereign wealth and private equity deals took place in Q1 2012, with 10 deals in March alone. This could mean that private equity players, who are usually the first movers in M&A, are taking comfort from upward revisions of regional economic growth projections and are gaining in transaction confidence," he pointed out.
In terms of deal volume in Q1 2012, the main countries targeted for domestic deal activity in MENA include the UAE with 13 deals, followed by Saudi Arabia and Egypt with 7 deals each.
The top 10 deals in Q1 2012 are valued at 7.27 billion or 85.5 percent of the total regional M&A deal value. Of these, five are outbound (regional business buying international assets), three are domestic (regional business buying regional assets) and two are inbound (international business buying regional assets), the report said.
The value of outbound deals stood at 5.5 billion and made up 64.7 percent of M&A transactions in Q1 2012. Domestic and inbound deals were both 17.64 percent of total value at 1.5 billion each, the report said.
In the cross-border segment, average size of inbound deals increased by 68.9 percent, rising from 113.1 million in Q1 2011 to 191 million in Q1 2012.