Ongoing global economic stability, combined with easier access to credit and concerted governmental efforts to maintain stable growth in the Middle East and north Africa (MENA) means the value of the region’s mergers and acquisitions (M&A) grew from $44.8bn in 2012 to $50.7bn in 2013, on the back of increasing investor confidence, according to the latest report by professional services firm Ernst & Young. Although the value of deals in the region fell in the fourth quarter of 2013, capital inflows as a whole remained robust, and the volume of M&A increased by 11%, reaching its highest level since 2007.

In its latest 'MENA capital confidence barometer', Ernst & Young found that 75% of executives surveyed expected higher local deal volumes in the MENA region, while 87% of executives maintained that credit availability had reached stable levels. The firm also found that although the region remained a net exporter of capital, increased executive confidence in local economic growth led domestic M&A transactions to increase by $22.5bn, and while outbound deals, which were worth $18.5bn, represented 37% of all M&A transactions last year, inbound M&A deals performed robustly and they were worth $9.7bn in 2013. Sovereign wealth funds continued to play a critical role in the region, as their M&A activity, which was worth $14.5bn last year, represented 29% of total M&A.


Unsurprisingly, Ernst & Young found that there was a marked divergence in the performance of MENA countries that were perceived as politically safe, as opposed to those that have continued to experience economic uncertainty and violence. While business confidence in countries such as Libya and Egypt continued to deter M&A in the region, the Gulf Co-operation Countries, particularly the United Arab Emirates and Qatar, experienced a consistent growth in M&A.

While large infrastructure projects attracted significant investments, Ernst & Young predicted that the industrials and chemicals sectors would also experience a significant rise in M&A. The firm found that the industrials and chemicals sectors accounted for 30% of all M&A deals in 2013, while the telecommunications, media and technology sector attracted 24.2% of M&A transactions.

The creation of the Emirates Global Aluminium, which was a $7.5bn merger of two UAE-based aluminium conglomerates, Dubai Aluminium Company and Emirates Aluminium, was the largest M&A deal in the region last year, while the acquisition of Itissalat Al Maghrib (Maroc Telecom) by the Emirates Telecommunications Corporation for $6.1bn, was the seond largest, and the third largest deal in the region since 2001.