Saudi Arabia’s petrochemical sector leads the top GCC M&A transactions during Q4 2018 as per a report recently issued by the Investment Banking Department at Kuwait Financial Centre “Markaz”. The top reported deal value during Q4 2018 was $2.3 billion 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% of UAE’s Destinations of The World from Gulf Capital for $173 million. SABIC increased its stake in Saudi Methanol to 75% by acquiring an additional 25% 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 Q4 2018 witnessed an 83% increase compared to Q4 2017 and Q3 2018. Among the region, Saudi Arabia reported the highest increase (in percentage terms) in the number of transactions in Q4 2018 compared to Q4 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% of the total number of transactions during Q4 2018 and 69% during Q3 2018. Foreign acquirers accounted for 17% of the total number of transactions during Q4 2018 and 24% during Q3 2018. Buyer information was not available for 8% of the transactions in Q4 2018.
Each of the GCC acquirers seemed to have a different appetite with regards to M&A transactions during Q4 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
Q4 2018 witnessed a 50% increase in the number of completed transactions by foreign buyers compared to Q4 2017. In comparison to Q3 2018, the number of such transactions grew by 29%.
UAE targets represented 78% of the closed transactions by foreign acquirers during Q4 2018, while Qatar and Oman each represented 11% of the transactions during the same period. Bahraini, Kuwait and Saudi targets did not attract any foreign buyers during Q4 2018.
Sectorial View
The Financials, Consumer Discretionary, and Industrials sectors witnessed the highest number of transactions, collectively accounting for 59% of the total closed transactions during Q4 2018. The Energy, Healthcare, and Insurance sectors each accounted for 4% of the total closed transactions during Q4 2018; collectively amounting to 12% of the transactions during the period.
Deals Pipeline
There was a total of 11 announced transactions in the pipeline during Q4 2018; the same as the number of announced transactions during Q3 2018.
Saudi Arabia and Kuwait collectively accounted for 82% of the announced transactions during Q4 2018. Oman and Bahrain made up 18% of the announced transactions.
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