Thursday 08 / May / 2025
Muscat: Saudi Arabia’s petrochemical sector led the top GCC M&A transactions during the fourth quarter of 2018, as per a report recently issued by the investment banking department at Kuwait Financial Centre (Markaz).
The top reported deal value during the fourth quarter of 2018 was US$2.3billion and involved the announced merger of Sahara Petrochemicals with Saudi International Petrochemical Company (Sipchem).
Zain Saudi has entered into a non-binding agreement to sell 8,100 of its tower network to IHS Holding for $648 million in an effort to reduce its debt obligations and focus on its core operations. Baker Hughes has acquired a minority stake in Adnoc Drilling for $550 million, marking the first time an international firm holds a direct stake in a UAE state-owned oil services business. Australia’s Webjet has acquired 100 per cent of UAE’s Destinations of The World from Gulf Capital for $173 million. Sabic increased its stake in Saudi Methanol to 75 per cent by acquiring an additional 25 per cent stake for $150 million from Japan Saudi Arabia Methanol Company.
GCC M&A growth
According to Markaz’ report, the number of closed M&A transactions in the GCC during the fourth quarter of 2018 witnessed an 83 per cent increase compared to the fourth quarter of 2017 and third quarter of 2018. Among the region, Saudi Arabia reported the highest increase (in percentage terms) in the number of transactions in the fourth quarter of 2018 compared to the fourth quarter of 2017, while Bahrain was the only country among its GCC counterparts that did not witness any change in the number of transactions during the same period.
Acquirers and targets
According to the report, GCC acquirers accounted for 75 per cent of the total number of transactions during the fourth quarter of 2018 and 69 per cent during the third quarter of 2018. Foreign acquirers accounted for 17 per cent of the total number of transactions during the fourth quarter of 2018 and 24 per cent during the third quarter of 2018. Buyer information was not available for eight per cent of the transactions in the fourth quarter of 2018.
Each of the GCC acquirers seemed to have a different appetite with regard to M&A transactions during the fourth quarter of 2018. Kuwaiti acquirers preferred investing in their home country and the greater GCC region. Saudi and UAE acquirers mostly invested in their home countries and outside the GCC region. Qatari and Omani acquirers preferred investing in their home countries. Bahraini acquirers only engaged in one transaction by acquiring a stake in a Saudi company.
Foreign buyers
The fourth quarter of 2018 witnessed a 50 per cent increase in the number of completed transactions by foreign buyers compared to the 2017 fourth quarter. In comparison to the third quarter of 2018, the number of such transactions grew by 29 per cent.
UAE targets represented 78 per cent of the closed transactions by foreign acquirers during the fourth quarter of 2018, while Qatar and Oman each represented 11 per cent of the transactions during the same period. Bahrain, Kuwait and Saudi targets did not attract any foreign buyers during the fourth quarter of 2018.
Sectorial view
The financials, consumer discretionary, and industrials sectors witnessed the highest number of transactions, collectively accounting for 59 per cent of the total closed transactions during the fourth quarter of 2018. The energy, healthcare, and insurance sectors each accounted for four per cent of the total closed transactions during the fourth quarter of 2018, collectively amounting to 12 per cent of the transactions during the period.
Deals pipeline
There were a total of 11 announced transactions in the pipeline during the fourth quarter of 2018, the same as the number of announced transactions during the third quarter of 2018.
