Record-setting 2015 for cross-border M&A globally and in the Middle East

2015 has established itself as a record-breaking year for cross-border M&A post-financial crisis, according to a Cross-Border M&A Index* by global law firm Baker & McKenzie. With corporate deal-making activity at record highs, those companies are also executing record levels of cross-border transactions, a global trend reflected in the Middle East. 

Overall M&A in 2015 reached US$4.28 trillion, of which 39% were cross-border in nature at US$1.66 trillion on 5,441 deals, up 17% on value over the prior year and enough to set a new post-crisis record. Full year cross-border deals included $1.06 trillion in cross-regional deals, up 7%, and US$595 billion in intra-regional deals, up 40%. Deals between the EU and North America account for 76% of all cross-regional activity by value.

While the Industrials sector led by volume with 195 cross-border deals globally, the Healthcare and Consumer sectors were in a class of their own by value, with $219.2 billion and $152.8 billion in deals, respectively.

The Index, which analyses the number, size and complexity of cross-border deals, stands at 331 for Q4 2015, well ahead of the prior quarter’s 254. The Index also surged past the prior record set in Q2 2014 at 278, as it has crossed 300 for the first time ever in its six year history. The Index has remained above 200 since Q1 2014.

The value of cross-regional deals targeting the Middle East increased significantly over the last year, and the region experienced record levels in the value of cross-border deals. The Middle East Index for Q4 2015 is 546.5, a massive increase on Q4 2014's 154.1, and far exceeding the previous record of 344.9 set in Q3 2012.

"2015 has seen record breaking cross-border deals by value in the Middle East, despite a backdrop of political and economic change," said Will Seivewright, Corporate/M&A partner at Baker & McKenzie Habib Al Mulla, based in the UAE. "Looking ahead to 2016 and beyond, notwithstanding low oil prices and macroeconomic uncertainty, we expect our clients to be opportunistic, particularly in relation to cross-border deals, and for continued deal activity in the UAE.” 

"The past year has been remarkable for M&A in the Middle East, with currency appreciation across a variety of regions bolstering companies to fund acquisitions,” added George Sayen, Head of Corporate Practice Group at Baker & McKenzie's associated firm in Riyadh. “Liberal regulatory efforts, especially in countries like Saudi Arabia and the UAE, should incentivize deal making and support cross-border activity.”

Inbound Middle East M&A

Cross-regional deals targeting the Middle East totaled 80 deals valued at US$9.73 billion in 2015, with the UAE featuring as the target country for three out of the top five M&A deals into the region. 

The top countries by value driving investment into the region were the US, China and the Netherlands, with acquisitions valued at US$3.21 billion, US$1.75 billion and US$1.57 billion respectively. The US was also the top bidder country by volume with 39 deals, followed by the UK and China with 10 and six deals respectively. 

The Computer Software sector was the top target industry in the Middle East by both volume and value, with 23 deals exceeding US$2 billion in value.

Outbound Middle East M&A

Cross-regional deals fueled by the Middle East totaled 105 deals valued at US$76.35 billion, with the UAE driving two of the top five outbound deals. 

The US was the top target country by both value and volume, with 21 deals valued at US$44.73 billion. South Africa and Turkey followed the US in terms of deal value, with deals valued at US$11.37 billion and US$3.45 billion respectively, while Spain and Turkey were the top target countries behind the US by deal volume, with 11 deals each.

The top sector for outbound M&A by value was the Pharmaceutical sector with four deals valued at US$46.02 billion, while the Computer Software sector led by volume with nine deals valued at US$90 million.