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

Date01 July 2020
Published date01 July 2020
AuthorAli M. Metwalli,Jim P. Demello
The next merger and acquisition hot spot in the Middle
East (20092018): An Update
Ali M. Metwalli | Jim P. Demello
Department of Finance and Commercial
Law, Haworth College of Business,
Western Michigan University, Kalamazoo,
Jim P. Demello, Haworth College of
Business, Western Michigan University,
Kalamazoo, MI 49009.
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.
foreign direct investment, Middle East, worldwide mergers and acquisitions
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 19902005 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 (20082009) 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,
19902018, 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
20 © 2020 Wiley Periodicals, Inc. J Corp Acct Fin. 2020;

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