MENA M&A moves in March are only the beginning

Posted on April 5, 2012

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Jewelry group Damas International may have been in the news for all the wrong reasons over the past three years, with financial mismanagement topping the list.

But last month’s news that Qatar’s Mannai Corporation and Egypt’s EFG Hermes are ready to collaborate on a USD 445 million acquisition of Damas shows that the intrinsic value of the jewelry maker and retailer is not only intact but also attractive.

According to Zawya’s M&A Monitor, in addition to the Damas deal, March also witnessed other activity, including:

HSBC’s acquisition of most of Lloyds Bank’s business in the UAE

Abu Dhabi’s Finance House taking over CAPM Investments

Abu Dhabi-based developers Aldar Properties and Sorouh Real Estate talking up a merger

Kuwait’s Burgan Bank seeking to buy Turkish lender Eurobank Tekfen

Egypt’s Compass Capital taking 51% of Beltone Securities Brokerage

The sudden flurry of mergers and acquisitions is expected to continue for the rest of 2012, for two reasons. One, companies finally believe they have some visibility of the economic recovery across the world settling into an upward rhythm. And they want to position themselves to make the most of this trend.

Two, the ravages of the recession have left behind a host of companies with intrinsic value but without the means to exploit this value. An infusion of cash and corporate responsibility could turn these assets into valuable components of a new owner’s portfolio.

Key M&A players such as Saudi Arabia, Abu Dhabi and Qatar, who aren’t impacted by liquidity constraints, will likely witness the biggest upturn in deal flow, according to Deloitte. Several sectors such as education and healthcare, consumer goods and the food and beverage industry will continue to be of interest, in addition to the financial services sector, which is also ripe for consolidation, the consultancy said.

Clearly, it is going to be an interesting year for takeovers, especially those originating in the Middle East and North Africa. After all, that’s where all the cash is, right?

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Posted in: Corporate