Increase in MENA Mergers & Acquisitions

Alas, a posting about something other than sanctions!  This week’s entry will focus on transactional matters concerning the Middle East and North Africa (MENA).   Arabian Business magazine’s website recently posted an article discussing a tremendous jump in MENA region mergers and acquisitions in 2010 over 2009 according to international consultancy Ernst & Young.  This is certainly good news for business in the region.  According to the article, most transactions were in Egypt, Jordan, and Saudi Arabia.

For all the fanfare, there are concerns that 2011 may not be as much of a continuation of this trajectory as planned. The political events in the Middle East have put some business activity on hold.  One of the victims of this may be the now-cancelled proposal by Etisalat (the UAE’s top telecommunications provider) to acquire 46% of  Kuwait’s Zain telecommunications company, what would have been a $12 billion transaction.

Political issues aside, the downturn in the Persian Gulf states following the global financial crisis may provide great opportunities for companies willing to invest in the region.  Jurisdictions such as Dubai have proven time and again to be stable havens for MENA (and other) capital in times of political strife elsewhere.  With the events going on around the region, we may yet see a rise in inbound GCC investment, a primary driver for statistics such as MENA region M&A.  The question remains, however, how the current economic and political climate will affect acquisitions outside MENA by MENA-based players.  Investors in the region may in fact see that there could be compelling motivations to invest their money at home.

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