The next merger and acquisition hot spot in the Middle East (2009–2018): An Update

• Date: 01 July 2020
• Published date: 01 July 2020
• Author: Ali M. Metwalli,Jim P. Demello
• DOI: http://doi.org/10.1002/jcaf.22442

BLIND PEER REVIEW

The next merger and acquisition hot spot in the Middle

East (2009–2018): An Update

Ali M. Metwalli | Jim P. Demello

Department of Finance and Commercial

Law, Haworth College of Business,

Western Michigan University, Kalamazoo,

Michigan

Correspondence

Jim P. Demello, Haworth College of

Business, Western Michigan University,

Kalamazoo, MI 49009.

Email: james.demello@wmich.edu

Abstract

Mergers and acquisitions are being increasingly used by corporate managers,

worldwide, to enter, develop, and enhance market share. Major economic,

social, and political changes have taken place in various countries in the Mid-

dle East region during the past decade as a result of the global recession of

2008 and the Arab Spring of 2011 resulting in the implementation of policies

fostering foreign direct investment, economic growth, and stability. Published

research regarding the impact of these policies on business organizations,

investment, trade, and competitive strategies is fairly sparse. This article pro-

vides an update regarding the merger and acquisition trends that have resulted

in 19 countries of the Middle East, with a particular focus on Israel, Saudi Ara-

bia, United Arab Emirates, Kuwait, and Egypt.

KEYWORDS

foreign direct investment, Middle East, worldwide mergers and acquisitions

1|INTRODUCTION

Over the past several decades, although countries in the

Middle East (ME) have witnessed major economic and

political changes resulting in the implementation of poli-

cies fostering foreign direct investment, economic

growth, and stability, there has been relatively little pub-

lished research analyzing the impact of these changes on

business organizations and on the relative distribution of

investment among the various ME nations. Metwalli and

Tang (2003, 2007), in a couple of earlier studies, reported

on the status of merger and acquisition activity in the

Middle Eastern region and presented a detailed break-

down of the completed deals that had taken place over

the 1990–2005 time frame. In particular, four Middle

Eastern countries, that is, Egypt, Israel, Kuwait, and

Saudi Arabia, were the main focus of these two studies.

Since 2005, however, we have witnessed a global eco-

nomic slowdown (2008–2009) and the occurrence of the

Arab Spring (2011). These two major events, with far-

reaching economic, social and political consequences,

must have had a significant effect on the financial res-

tructuring activities of the Middle Eastern (ME) region.

Accordingly, the purpose of this study is to provide an

update of merger and acquisition (M&A) activity in the

ME region for the most recent decade (i.e., from 2009 to

2018), so as to discuss and analyze the impact of political

and economic policies of the region on M&A trends.

Additionally, we provide a comparison of M&A activity

in the five ME countries that have accounted for the larg-

est M&A transaction dollar value, namely United Arab

Emirates (UAE), Israel, Egypt, Saudi Arabia, and Kuwait.

During the last three decades or so, that is,

1990–2018, M&A activity has expanded significantly in

most regions of the world, including the ME region. In

Exhibit 1, we see that in 1990, the value of M&A in the

ME region was only $2.3 billion. It went up to $3.9 billion

in 1995 and reached $12.8 billion in 1999. The recession

in 2002 resulted in a significant decline in M&A value to

around $4.8 billion. Thereafter, it took about 3 years for

M&A transaction value to increase to around $26.2

billion, that is, by 2005. In 2006, the M&A deal value

Received: 7 January 2020 Revised: 30 January 2020 Accepted: 1 February 2020

DOI: 10.1002/jcaf.22442

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