Kuwait Financial Centre “Markaz” R E S E A R C H
GCC M&A Report – Q1 2016 June 2016 Transactions were the same compared to Q1 2015
During Q1 2016, the number of closed M&A transactions in the GCC stayed the Research Highlights: same compared to Q1 2015. Among the region, transactions in Kuwait and Provides a review of M&A Oman witnessed a growth of 250% and 100% respectively, the United Arab transactions in the GCC region. Emirates and Qatar witnessed a decline of 29% and 100% respectively, and no Markaz Research is available change was realized in Bahrain and Saudi Arabia. on: The United Arab Emirates had the highest the number of closed transactions Bloomberg - Type “MRKZ”
preferred investing in the GCC, while Kuwaiti and Emirati acquirers preferred Abdulrazzaq Razooqi investing outside the GCC region. Sr. Analyst – Corporate Finance +965 2224 8000 Ext: 1149 Figure: Number of Closed GCC M&A Transactions [email protected] % Change % Change Country Q1 2016 Q4 2015 Q1 2015 (Q4 2015) (Q1 2015) Kuwait Financial Centre K.P.S.C. “Markaz” Bahrain 1 0 1 N/A 0% Kuwait 7 4 2 75% 250% P.O. Box 23444, Safat 13095, Kuwait Oman 2 4 1 -50% 100% Tel: +965 2224 8000 Qatar 0 2 2 -100% -100% Fax: +965 2242 5828 Saudi Arabia 6 6 6 0% 0% markaz.com United Arab 10 16 14 -38% -29% Emirates Total 26 32 26 -19% 0%
Source: S&P Capital IQ, Markaz Analysis Kindly note that % changes are in comparison to Q1 2016.
GCC Merger & Acquisition Deals Q1 2016 M&A Transactions within GCC GCC Mergers & Acquisitions - Transaction History (Closed)
GCC M&A Transactions – Number of Transactions Key Takeaways % Change % Change Country Q1 2016 Q4 2015 Q1 2015 Q1 2016 witnessed a 19% decline in the number of (Q4 2015) (Q1 2015) transactions compared to Q4 2015 and the same Bahrain 1 0 1 N/A 0% Kuwait 7 4 2 75% 250% number of transactions compared to Q1 2015. Oman 2 4 1 -50% 100% UAE had the highest number of transactions among Qatar 0 2 2 -100% -100% its GCC counterparts. Saudi Arabia 6 6 6 0% 0% United Arab Qatar did not engage in any closed transactions 10 16 14 -38% -29% Emirates during Q1 2016. Total 26 32 26 -19% 0% During Q1 2016, the UAE accounted for 38% of the Source: S&P Capital IQ, Markaz Analysis Kindly note that % changes are in comparison to Q1 2016. transactions, the highest, while Bahrain, accounted for the lowest at 4%. GCC M&A Transactions – Geographical Distribution by Number of Transactions Kuwait reported the highest increase in the number (Q1 2016) of transactions in Q1 2016 compared to Q4 2015. Bahrain Oman 4% While Qatar, reported the sharpest decline of 100% 8% in the number of transactions during the same United Arab period. Emirates Saudi Arabia 38% 23%
Kuwait 27%
3 GCC Mergers & Acquisitions - Announced Transactions in the Pipeline
GCC M&A Transactions – Announced Pipeline Transactions Key Takeaways Country Q1 2016 Q4 2015 Total of 12 announced transactions in the pipeline Bahrain 1 1 during Q1 2016 compared to 16 announced Kuwait 2 3 transactions during Q4 2015. Oman 4 1 The UAE and Oman together make up 68% of the Qatar 0 1 total announced transactions. Saudi Arabia 1 3 Kuwait, Saudi Arabia, and Bahrain make up the United Arab Emirates 4 7 remaining 32% of the total announced transactions. Total 12 16
Source: S&P Capital IQ, Markaz Analysis
GCC M&A Transactions – Geographical Distribution by Number of Announced Pipeline Transactions (Q1 2016)
Saudi Arabia Bahrain 8% 8% United Arab Emirates 34% Kuwait 16%
Oman 34%
4 GCC Mergers & Acquisitions - Top 5 Deals by Reported Value
Targets & Buyers – Q1 2016 Key Takeaways Target Target Buyer Percent Deal Value Buyer Status Company Country Country Sought (USDmn) The top reported deal value during Q1 2016 was Kuwait Food United Arab $1.8 billion. Company Kuwait Adeptio 67 1,800 Announced* Emirates (Americana) Kuwait was the most prevalent target country Kuwait Telecom Saudi Telecom among the top deals. Kuwait Saudi Arabia 26 425 Closed Company Company (STC) Four of the top five deals involved targets and (VIVA) Boubyan Nafais Holding buyers being from the GCC with one of the buyers Kuwait Petrochemical Kuwait 83 168 Announced Company Company** being from the United States. Emirates Ship United Arab Tristar United Arab Investment 100 90 Announced Emirates Transport Emirates Company FourQuest United Arab Actuant United States 100 64 Closed MENAC Emirates Corporation Source: S&P Capital IQ, Markaz Analysis Kindly note that top deals were chosen based on transactions which had all necessary information provided.
*Kindly note that as of Q2 2016, the transaction has been cancelled due to the failure in negotiations between the Seller and the Acquirer. ** Please note that as of Q2 2016, Gulf Friends Real Estate Co. had submitted a Competing Offer on Nafais’ shares. Also, Boubyan Petrcohemical Company had submitted a Revised Offer, which was then subject to update 5 due to litigations faced by Nafais’ subsidiary. GCC Mergers & Acquisitions - Foreign (Non-GCC) Buyers (Closed)
Number of Foreign Buyers’ Deals in GCC Key Takeaways Country Q1 2016 Q4 2015 Q1 2015 Q1 2016 witnessed a 25% decrease in the number Bahrain 0 0 1 of transactions compared to Q1 2015. In Kuwait 0 0 1 comparison to Q4 2015, the number of transactions Oman 0 2 0 fell by 33%. Qatar 0 1 0 UAE attracted the highest number of foreign buyers Saudi Arabia 1 0 0 among its GCC counterparts while Bahrain, Kuwait, United Arab 5 6 6 Emirates Oman, and Qatar failed to attract any. Total 6 9 8
Source: S&P Capital IQ, Markaz Analysis
GCC M&A Transactions – Geographical Distribution by Number of Transactions
(Q1 2016)
Saudi Arabia 17%
United Arab Emirates 83%
6 GCC Mergers & Acquisitions - Top Deals by Reported Value (Foreign)
Targets & Foreign (Non-GCC) Buyers – Q1 2016 Key Takeaways Target Target Buyer Percent Deal Value Company Buyer Status Three of the top five transactions by foreign Company Country Sought (USDmn) Country FourQuest United Arab Actuant companies included targets from UAE. United States 100 64 Closed MENAC Emirates Corporation Majority of the top five transactions were for stakes Greenfield Bahar Energy United Arab Petroleum United States 67 64 Announced more than 50%. Limited Emirates International Company Three of the top transactions were closed. Oman Air, SATS Cargo Handling Oman Singapore 33 17 Announced Investments Business Arabian Paper Products Saudi Arabia Huhtamaki Oyj Finland 10 4 Closed Company Shankland Cox United Arab Aukett Swanke United 100 4 Closed Limited Emirates Group Kingdom Source: S&P Capital IQ, Markaz Analysis Kindly note that top deals were chosen based on transactions which had all necessary information provided.
7 GCC Mergers & Acquisitions - By Sector (Closed)
Sector-wise Classification of Deals – Q1 2016 Key Takeaways GCC Foreign Grand Sector Other* % Acquirers Acquirers Total GCC acquirers accounted for 69% of the total Financials 5 0 1 6 23 number of transactions during Q1 2016 and 63% Consumer Discretionary 2 3 0 5 19 Healthcare 3 1 0 4 15 during Q4 2015. Foreign acquirers accounted for Industrials 2 1 1 4 15 23% of the total number of transactions during Q1 Utilities 2 0 0 2 8 Telecommunication Services 2 0 0 2 8 2016 compared to 28% during Q4 2015. Consumer Staples 1 0 0 1 4 The Financials and Consumer Discretionary sectors Real Estate 1 0 0 1 4 Energy 0 1 0 1 4 witnessed the highest number of transactions Grand Total 18 6 2 26 100 accounting for 23% and 19% respectively of the Source: S&P Capital IQ, Markaz Analysis total transactions during Q1 2016. *Other refers to deals where buyer information is not available. The Utilities and Telecommunication Services Sector-wise Classification of Deals – Q4 2015 sectors each accounted for 8% of the total number GCC Foreign Grand Sector Other* % Acquirers Acquirers Total of transactions during Q1 2016. Industrials 3 4 0 7 22 Consumer Discretionary 3 1 1 5 16 Consumer Staples 4 0 0 4 13 Education 1 1 1 3 9 Financials 1 1 1 3 9 Healthcare 2 1 0 3 9 Materials 2 1 0 3 9 Information Technology 2 0 0 2 7 Energy 1 0 0 1 3 Real Estate 1 0 0 1 3 Grand Total 20 9 3 32 100 Source: S&P Capital IQ, Markaz Analysis *Other refers to deals where buyer information is not available.
8 M&A Transactions by GCC Acquirers Merger & Acquisition Watch - By Kuwaiti Acquirers
Targets & Buyers – Q1 2016 Key Takeaways Target Percent Deal Value Target Company Company Buyer Status The highest value among the top deals was $168 Sought (USDmn) Country Boubyan million. Nafais Holding Kuwait Petrochemical 83 168 Announced Company 60% of the closed transactions were in Kuwait, Company* Petrochemical SK Advanced Co. South Korea 25 97 Closed showing the preference of investing at home. Industries Company Al Fireej International Kuwait Real Estate One of the top five transactions included a target in Kuwait 100 45 Closed Real Estate Company Company South Korea and another included a target in Fast National Mobile Telecommunication Kuwait Telecommunications 99 36 Closed Lebanon. Co. Company Mobile FOO Lebanon Telecommunications N/A N/A Closed Company Source: S&P Capital IQ, Markaz Analysis Kindly note that top deals were chosen based on transactions which had all necessary information provided. Target Companies – Geographical Distribution by Number of Transactions (Closed) (Q1 2016)
Kuwait 40%
Outside GCC 60%
10 * Kindly note that as of Q2 2016, Gulf Friends Real Estate Co. had submitted a Competing Offer on Nafais’ shares. Also, Boubyan Petrcohemical Company had submitted a Revised Offer, which was then subject to update due to litigations faced by Nafais’ subsidiary. Merger & Acquisition Watch - By KSA Acquirers
Targets & Buyers – Q1 2016 Key Takeaways Target Company Percent Deal Value Target Company Buyer Status Country Sought (USDmn) Two of the top five transactions involved targets in Kuwait Telecom Saudi Telecom Kuwait 26 425 Closed Saudi Arabia. Company Company United Power Khaled Juffali One of the closed transactions involved a target in Oman 38 N/A Closed Company Company the Netherlands. Ebrahim Mohammed Al Mana Sanabil Saudi Arabia 20 N/A Closed The highest value among the top deals was for a & Brothers Investments Company stake lower than 50%. Saudi Aerospace Saudi Arabian and Engineering Saudi Arabia Airlines 30 N/A Closed Industries Corporation Saudi Basic Fibre Reinforced Netherlands Industries N/A N/A Closed Thermoplastics Corporation Source: S&P Capital IQ, Markaz Analysis Kindly note that top deals were chosen based on transactions which had all necessary information provided. Target Companies – Geographical Distribution by Number of Transactions (Closed) (Q1 2016)
GCC 24% Saudi Arabia 38%
Outside GCC 38%
11 Merger & Acquisition Watch - By UAE Acquirers
Targets & Buyers – Q1 2016 Key Takeaways Target Percent Deal Value Target Company Company Buyer Status The highest value among the top deals was $1.8 Sought (USDmn) Country Kuwait Food billion. Company Kuwait Adeptio 67 1,800 Announced* All of the top transactions were for stakes higher (Americana) Emirates Ship than 50%. United Arab Investment Tristar Transport 100 90 Announced Emirates Company 58% of closed deals involved targets outside the Fastway Limited, GCC, 26% were in the UAE, and 16% in GCC Australia and New New Zealand Aramex 100 81 Closed Zealand business countries other than the UAE, showing the SCCP Central Valley preference of investing outside the GCC region. United States Gulf Islamic Investments 100 45 Announced Limited Partnership Al Thiqa Restaurant Kuwait Baynona Investment 100 19 Closed Company Source: S&P Capital IQ, Markaz Analysis Kindly note that top deals were chosen based on transactions which had all necessary information provided. Target Companies – Geographical Distribution by Number of Transactions (Closed) (Q1 2016) GCC 16%
United Arab Emirates Outside GCC 26% 58%
12
*Kindly note that as of Q2 2016, the transaction has been cancelled due to the failure in negotiations between the Seller and the Acquirer. Merger & Acquisition Watch - By Qatari Acquirers
Targets & Buyers – Q1 2016 Key Takeaways Target Target Company Percent Deal Value Buyer Status Company Country Sought (USDmn) Two of the top transactions involved Qatari GIC Pte Ltd / acquirers acting as part of a consortium. British Columbia Investment Three of the top transactions were announced. Management All of the top transactions involved targets outside Asciano Holdings Corporation / (Containers) Pty Australia Qatar Investment 100 2,189 Announced Qatar and other GCC countries, showing Qatar’s Ltd Authority / preference in investing outside the GCC. Brookfield Infrastructure Partners / Qube Holdings Limited GIC Pte Ltd / British Columbia Investment Management Asciano Holdings Corporation / (General & Bulk) Australia 100 690 Announced Qatar Investment Pty Ltd Authority / Brookfield Infrastructure Partners beIN Media Miramax United States 100 N/A Closed Group PT Paiton Energy Indonesia Nebras Power 41 N/A Announced
Source: S&P Capital IQ, Markaz Analysis Kindly note that top deals were chosen based on transactions which had all necessary information provided. Also note that Qatar only engaged in one closed transaction during Q1 2016.
13 Merger & Acquisition Watch - By Bahraini Acquirers
Targets & Buyers – Q1 2016 Key Takeaways Target Target Company Percent Deal Value Buyer Status Company Country Sought (USDmn) 100% of the closed transactions involved targets in Middle East the GCC region. Saudi Arabia Ahli United Bank 40 N/A Closed Financial Capital Bindawood Two of the top transactions involved targets in Saudi Arabia Investcorp N/A N/A Closed Holding Saudi Arabia. Bahrain Gulf Cryo Kuwait Mumtalakat 10 N/A Closed Holding Company Source: S&P Capital IQ, Markaz Analysis Kindly note that top deals were chosen based on transactions which had all necessary information provided. Target Companies – Geographical Distribution by Number of Transactions (Closed) (Q1 2016)
GCC 100%
14 Merger & Acquisition Watch - By Omani Acquirers
Targets & Buyers – Q1 2016 Key Takeaways Target Target Company Percent Deal Value Buyer Status Company Country Sought (USDmn) All of the top transactions involved targets in Oman, Arab Bank showing Omani acquirers’ preference in investing in (Switzerland) / their home country. OAB Investment Oman International Management Oman Development and 100 N/A Announced Omani acquirers did not engage in any closed Group Investment Company / Oman transactions during Q1 2016. Investment Fund Falcon Insurance Oman Oman Arab Bank 51 N/A Announced Company National Renaissance Hospitality Oman N/A N/A Announced Services Institute Source: S&P Capital IQ, Markaz Analysis Kindly note that top deals were chosen based on transactions which had all necessary information provided. Also note that Oman did not engage in any closed transactions during Q1 2016.
15 Kuwait Financial Centre K.P.S.C. "Markaz"
P.O. Box 23444, Safat 13095 State of Kuwait
Tel: +965 2224 8000 Fax: +965 2241 4499 Email: [email protected] www.markaz.com MARKAZ RESEARCH GCC M&A Report – June 2016
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