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Egyptian M&A dominates North African dealmaking as energy and telecoms deals lead activity

  • Egypt’s M&A activity accounts for 75.1% of North African deal value and 58.3% of the volume in 2019
  • Two deals in energy and telecoms made up the bulk of M&A deal value in 2019 so far
  • General YTD M&A in Egypt remains robust, with 14 deals worth USD 1.3bn

 13th November 2019, Cairo, Egypt: Mergermarket, the leading provider of M&A data and intelligence, has announced that Egypt’s M&A deal value accounts for 75.1% of the North African value and 58.3% of its volume, up from 48.4% and 39.5%, respectively, in year to date (YTD) 2019.  The data was announced at Mergermarket’s second annual Egypt M&A and Private Equity Forum held in Cairo on 13th November.

Two deals made up the bulk of Egypt’s deal value in YTD 2019, both inbound M&A deals. The first was the acquisition of a stake in Gulf of Suez Petroleum Company by Dragon Oil Plc, worth USD 600m. The Dragon Oil deal will enable the company to expand its presence in the Egyptian market, enhancing its global position and investments globally. The second deal was between Netherlands-based telecoms services company, VEON Ltd and Global Telecom Holdings S.A.E., worth EUR 578m. VEON Ltd has agreed to acquire all the outstanding shares of Global Telecom Holding S.A.E. that it does not own by way of a mandatory takeover offer.

“The rise of inbound M&A could be attributed to the fact that Egyptian pound’s devaluation against foreign currencies led to low valuations, which has made Egyptian companies more attractive to foreign investors,” commented Atef A. Hassan, Middle East Correspondent at Mergermarket.

General M&A in Egypt remained robust in YTD 2019, with 14 deal worth USD 1.3bn compared to 15 deals worth USD 1.9bn in YTD 2018, despite the global slowdown in dealmaking, which dropped by 11.4% in 3Q19. In contrast, North African 2019 YTD M&A deal value has dropped considerably (24 deals worth USD 1.7bn) compared to the same period in 2018 (38 deals worth USD 4.1bn). After the flotation of the Egyptian pound in 2016, investors adopted a "wait and see" approach to assess the post-flotation economic situation. This has changed since 2018, driven by currency stability and economic reforms and has resulted in confidence by investors and more M&A activities.

 

Hussein Choucri - Founder, Chairman and Managing Director, HC Securities and Investment commented: “Egypt is seeing more M&A activities from foreign investors compared to previous years. The overall positive macroeconomic outlook, successful fiscal and monetary policies and bullish business environment have made Egypt a high rank investment destination. We continue to be active in M&A in Egypt and the Gulf where we advised strategic and financial investors on successful transactions during the past 12 months in the packaging, oil and gas, food & beverage and healthcare sectors. We are quite pleased with our association with Mergermarket and look forward to having a successful conference.”

Mohamed Gabr, Partner & Head of Corporate Commercial – Egypt, at Al Tamimi commented: “The Egyptian market is witnessing growing M&A activity with many deals closing in the past 12 months, and many more deals in the pipeline. The market is very diverse both in terms of deal size and deal structure. We are also noting growing activity within the local ecosystem. We have acted and continue to act for local and foreign investors, strategic and financial investors, and founders and family businesses.”

Heba Abdelrahman, Editor at Dealreporter commented: "While the figures remain modest, the trend in M&A in Egypt is encouraging compared to overall global trends in M&A activity. Prolonged political stability, combined with the devaluation of the Egyptian pound and economic growth is increasing confidence among both local and foreign investors."

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