M&A in Africa: Bleak skies overhead, but the future looks brighter – Part 2

M&A in Africa: Bleak skies overhead, but the future looks brighter - Part 2

Part 1 of this article looked at the mergers and acquisitions market in South Africa; this part will explore M&A conditions in other parts of the continent. Nigeria

Going against the downward trend, dealmaking in Nigeria increased by 44% with 26 deals in H1 2020 compared to 18 in H1 2019. Total deal value went down 46% to US$204mn in the first half of 2020, from $375mn in H1 2019 (but this is likely because most of the deals listed for H1 2020 have no disclosed deal value.) The number of cross border deals increased by 18% in comparison to the first half of 2019, while domestic deals were also up by 86% year-on-year.

Half of the total M&A deals in Nigeria were cross border transactions, totalling $40mn. Deals were evenly distributed among industries, with financials and high technology recording two inbound deals each and the industrials sector recording two outbound M&A deals.

The $21mn acquisition of Interporto di Venezia SpA in March 2020 by an Orlean Invest Holding subsidiary for $21mn, was the biggest cross border deal in Nigeria in the first half of 2020.

Wildu du Plessis, Head of Africa for Baker McKenzie in Johannesburg, notes that policy and economic uncertainty, including lack of access to foreign exchange, stalled dealmaking in Nigeria recent years. However, the Central Bank of Nigeria introduced a foreign exchange window a few years ago, allowing trading at market-determined rates, which boosted the supply of foreign exchange and encouraged dealmakers. The government was also looking at more business-friendly legislation. The Nigerian economy was already impacted quite severely by the disruption in oil markets in recent years, but Covid-19 has added extensive damage to the economy, and this will undoubtedly impact negatively on M&A numbers going forward.”

Mergers and acquisitions (M&A) have decreased across Africa in the first half of 2020 in terms of both volume and value, with some exceptions. Going forward, dark clouds remain over the M&A market in Africa in the short-term, but recent developments brighten the continent’s prospects for medium-term recovery… Kenya

Kenya announced a 50% drop in volume and a 51% decline in value in M&A deals in H1 2020 compared to H1 2019. There were 15 M&A deals in H1 2020 worth $129mn. Twelve of the 15 deals in the first half of 2020 were cross border transactions.

For inbound cross border deals, the focus was on media and entertainment, with three deals, […]

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