UAE an attractive destination for mergers and acquisitions

Companies listed on local stock markets continue to expand through new acquisitions, enhancing the country’s position as a global investment destination and its preference as a business environment that supports companies’ growth and expansion. Since the beginning of this year 2024 until the end of the first week of September, the local market has recorded a group of new acquisitions.

Financial analysts told Emarat Al Youm that the UAE has become an attractive destination for mergers and acquisitions, providing a favorable environment with a strong economy, attractive investment opportunities, and an appropriate regulatory framework. They expect mergers and acquisitions activity to continue in the coming years, especially in sectors such as healthcare, technology, and renewable energy.

Acquisitions

The latest acquisition was the announcement by Sukoon Insurance Company, listed on the Dubai Financial Market, that it had completed the acquisition of the life insurance portfolio in the UAE, owned by Chubb Tempest Life Reinsurance Limited.

On September 4, Abu Dhabi National Energy Company (TAQA) announced the completion of its agreement to acquire Sustainable Water Solutions Holding Company, completing the acquisition of all of its existing shares for AED 1.7 billion, while ADNOC Drilling and Alpha Dhabi announced on September 2 that their joint venture, Inersol, had completed the acquisition of an additional 42.206% stake in Gordon Technologies.

In August 2024, shareholders of BHM Capital Financial Services approved the acquisition of Al Waqan Capital Investment Company, a subsidiary of Core International Holding Group, in exchange for issuing new shares to Al Waqan shareholders, which will increase the company’s capital value from AED 173.4 million to AED 5.02 billion, according to a previous disclosure to the Dubai Financial Market.

For its part, the General Assembly of Ras Al Khaimah White Cement and Construction Materials Company approved, on July 9, the conditional cash offer submitted by Ultratech Cement Middle East Investments Limited, to acquire 125 million shares, representing 25% of the issued and paid-up ordinary shares in the company’s capital, not owned by Ultratech.

On July 30, the Board of Directors of Al Ansari Financial Services Company approved the acquisition of 100% of the total issued capital of BFC Group Holdings, a limited liability company established in Bahrain.

The first half of 2024 witnessed a series of acquisition agreements, most notably the signing of an agreement by ADNOC Logistics and Services Company, whereby ADNOC Logistics and Services will acquire 80% of Navig 8, headquartered in Singapore, for AED 3.8 billion, with the transfer of economic ownership effective from January 1, 2024. It will also acquire the remaining 20% ​​of the company, which owns 32 modern tankers, in 2027, for a deferred amount ranging between AED 1.2 and 1.7 billion.

In early June 2024, RAK Ceramics announced the successful completion of the acquisition of 100% of the capital of RAK Porcelain Company, while Menzies Aviation, one of Agility Global’s companies listed on the Dubai Financial Market, announced on June 6, 2024, its expansion into Southern Europe, by completing the acquisition of a 50.1% stake in Groundforce Portugal Aviation Services.

The agreements also included the announcement by Presight AI Holding PLC, listed on the Abu Dhabi Securities Exchange, in early June, of the completion of the transaction to purchase an indirect stake of 51% of the issued capital of Matrix JV Co Ltd (AIQ) from G42 Investments AI Holding Limited, for $350 million to be paid in two installments.

On April 18, Abu Dhabi National Insurance Company (ADNIC) announced its acquisition of 51% of the capital of Allianz Saudi Fransi Cooperative Insurance Company, for $133 million.

In March 2024, Agthia Group announced the completion of the merger of an additional 10% stake in Auf Group, which specializes in manufacturing healthy snacks, coffee, and retail in Egypt, raising its stake to 70%. Abu Dhabi Ports Group also announced the signing of an agreement with Inveco to acquire a 60% ownership stake in Tbilisi Dry Port in Georgia.

The acquisitions also included the announcement by Abu Dhabi Ports Group in early February 2024 that Maqta Gateway, the group’s digital arm, had acquired a 60% stake in Dubai Technology Company, in a deal worth AED 28 million. In the first quarter, the group also completed the acquisitions of APM Terminals Castellón in Spain, Cesse Vehicle Logistics in Europe, Karachi Gateway Multipurpose Terminal Limited in Pakistan, and GFS in the UAE.

Attractive destination

“Mergers and acquisitions in local capital markets have witnessed an increase in recent years, as the country has become an attractive destination for M&A deals, supported by its stable political and economic environment, tax policies, and strategic location as a business hub in the Middle East,” said Raed Diab, Senior Vice President of Research and Investment Strategy at Kamco Invest.

Diab expected that the UAE’s strategic location, strong infrastructure, and welcoming business environment would support merger and acquisition activity in the country in the coming years.

For his part, Abdul Qader Shaath, Director of Al Ansari Financial Brokerage Company, said that the acquisitions carried out by listed companies aim to maximize profits by creating a larger entity in terms of financial strength, value and market share in the sector concerned with that operation. He explained that listed companies carry out these operations due to the availability of additional liquidity, which confirms the strength of economic activity in the country.

Financial markets analyst Mahmoud Atta said that the UAE provides a favorable environment for mergers and acquisitions, with a strong economy, attractive investment opportunities, and an appropriate regulatory framework. He expected mergers and acquisitions in the UAE to continue to grow in the coming years, especially in sectors such as healthcare, technology, and renewable energy.

Two acquisitions in January

January 2024 witnessed the announcement of “Palms Sports Company” that it had completed the acquisition of 100% of the ownership shares of “Learn Educational Investment Company”, which owns the “Al-Rabee School” and “Al-Rabee Academy” brands.

In turn, “Ghada Holding Company” announced that its wholly-owned subsidiary “AeroInvest Holding” indirectly concluded a share purchase agreement to acquire a 44% stake in the Turkish airline “MNG”, which specializes in commercial cargo, at an acquisition value of $211.2 million.