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Middle East H1 cross-border M&As up despite global decline; UAE tops in region

July 2016

July 25, 2016 | 2:10 | Dubai

Global cross-border M&A volume and values were subdued in Q2 2016, as investors held their breath, but the Middle East region saw an increase in both inbound and outbound cross-regional activity in the first half of 2016, according to global law firm Baker & McKenzie’s quarterly Cross-Border M&A Index. Hesitancy persisted as global markets remained volatile, and consequently, the Index, which tracks quarterly deal activity using a baseline score of 100, dropped to 176, down 33% from Q2 2015’s total of 263, the lowest Index result since Q3 2013. Buyers announced 1,320 cross-border deals worth US$214 billion, a 4% drop in volume and a 45% drop in value compared to Q2 2015. Although North America was the largest cross-regional outbound market by volume, the EU (particularly the UK) and North America experienced the largest reductions in deal values.

The Middle East Index dramatically increased from its Q1 2016 position of 141 to 437 in the second quarter of the year, signifying the strength of cross-border M&A activity in the region, with the UAE standing out as the most active country in the region in respect of both inbound and outbound investment. In inbound M&As, the UAE attracted the most interest from international investors in H1 2016 and was the target country of 12 of the 16 deals into the Middle East. The US remained the top bidder country for the first half of the year, with five deals valued at US$60 million, while China led by value with three deals valued at US$1.37 billion. The volume of outbound M&A from the Middle East in H1 2016 was slightly up on H1 2015 (with 35 deals compared to 33 deals). Notably, the UAE drove over half of the outbound deals from the Middle East, leading on 17 of the 35 deals seen in the first half of the year, followed by Qatar with eight deals and Saudi Arabia with four.

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