The Gulf Cooperation Council (GCC) market has recently undergone a significant transformation in its mergers and acquisitions (M&A) landscape. According to a report by the Kuwait Financial Centre (Markaz), the region experienced a 22 percent decline in M&A activity during the first nine months of 2023.
Key players
In this shifting landscape, two GCC countries emerged as key players. The United Arab Emirates (UAE) claimed 77 closed transactions, showcasing its dominant position in the region’s deal-making activities. Following closely is Saudi Arabia which secured the second position with 30 transactions. This underlines its consistent role in the GCC’s mergers and acquisitions scene.
One highlight was the impressive performance of Q Holding, a prominent Emirati company that led the top transactions this year. Q Holding announced a game-changing $7 billion merger. This transaction involves merging ADQ Real Estate, Hospitality Investments, and IHC Capital Holding’s entities, which encompass Modon Properties. It also involves merging the Abu Dhabi National Exhibition Company and various other assets under the Q Holding umbrella.
Another noteworthy transaction involved the Jazan Integrated Gasification and Power Company. It acquired the Jazan Integrated Gasification Combined Cycle (IGCC) plant from Saudi Aramco, valued at $4.8 billion. Additionally, the Saudi Public Investment Fund and Saudi Basic Industries Corporation signed a binding agreement. The agreement is to acquire the shares of Saudi Iron and Steel Company valued at $3.3 billion.
International players
Other international players include Brookfield Asset Management, CVC Capital Partners Limited, and Francisco Partners. They submitted substantial billion-dollar bids for the acquisition of UAE’s Network International. Competition intensified when Canadian-based Brookfield Asset Management entered the bid with a non-binding offer, potentially altering the landscape.
Furthermore, Fairfax Financial Holding Company Limited announced its intention to acquire an additional 46.3 percent stake in Gulf Insurance Group. Thus, it positioned itself as the largest shareholder with approximately 90 percent ownership.
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Acquirers and targets
Patterns in the GCC mergers and acquisitions landscape reveal an interesting pattern. The majority of transactions in both 2022 and 2023 were carried out by acquirers from the GCC. Â Local players were responsible for a substantial 73 percent of the total completed transactions. Meanwhile, foreign acquirers were left with a 27 percent share.
GCC acquirers were particularly active in both local and cross-border transactions. They closed 80 transactions within their local markets so far this year, compared to 99 transactions in 2022. Additionally, GCC acquirers sealed 63 cross-border transactions during the first nine months of 2023. That is a minor decrease from the 64 cross-border transactions in the previous year. Within this segment, UAE buyers headed cross-border activity, representing approximately 60 percent of the total activity. While Saudi Arabia and Qatar followed at 19 percent and 13 percent, respectively.
However, the report suggests that foreign interest in GCC targets experienced a slight decrease in the first nine months of 2023. Thus, 34 transactions were completed, marking a 13 percent year-over-year decline. Meanwhile, UAE remained a prime attraction for foreign buyers, finalizing 25 transactions in the first three quarters of 2023.
Sectors overview
M&A activity in the GCC during the first nine months of 2023 encompassed a wide array of sectors. Notably, the consumer discretionary, industrial, and information technology sectors emerged as the most active. They collectively contributed to 37 percent of the total transactions completed during this period. This diversification reflects the dynamic nature of the GCC’s economy and business environment.
Looking ahead, the GCC M&A market shows promising signs with 81 announced transactions in the pipeline so far. This is a decrease compared to the previous year, which witnessed 100 announced transactions. The majority of these transactions involved UAE targets which accounted for 40 percent of the total number of announced deals. Meanwhile, Saudi Arabia and Kuwait followed closely. Omani, Qatari, and Bahraini targets were also featured in the pipeline. However, it’s worth noting that all markets, except Oman, experienced a significant reduction in activity compared to 2022.
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