M&A WATCH- The value of M&A activity in the Middle East fell 58% y-o-y in 1H2020, outpacing the global average decline of 41%, according to a report from Baker Mckenzie. M&A volume, meanwhile, dropped 26% in the region during the same period. M&A activity started slow in January, but picked up in February before a steep decline in March at the outset of the covid-19 pandemic. Globally, the downturn peaked in April with transaction volumes falling 34% and value falling 69%. The trend was slightly reversed in May and June for the Middle East. We noted this in our coverage of 1Q2020 figures earlier this year.

Cross-border M&A fell by both value and volume compared to a year earlier. Value dropped by USD 5 bn y-o-y and volumes to 132 from 163. Cross-regional volumes were also down from the first quarter of 2019, but values increased by nearly one quarter to reach USD 23.17 bn from USD 19.26 bn.

Egypt was the #2 target country for outbound cross-regional M&A, with a total of 10 agreements valued at USD 2.6 bn, the law firm said. The US ranked first in this category, while the UK came in third. The figure for Egypt is largely owed to a single transaction: The still-in-the-works acquisition by STC of Vodafone Group’s shareholding in Vodafone Egypt.

The future looks brighter: While covid-19 has had a negative impact on M&A activity in the region, “the dramatic increase in the value … during the final two months of H1 2020 showcases a positive outlook and an early recovery sign,” said Omar Momany, who runs M&A at Baker McKenzie Habib Al Mulla in the UAE. The outlook was much less rosy when the law firm released its 1Q2020 report, which showed Middle East M&A falling 90% y-o-y in value terms.