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M&A in Africa

08 February 2017 | Africa
Legal Briefings

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M&A in Africa: A regional overview 2018

The slowdown in M&A activity across African markets, which became apparent in 2016, has continued into 2017 with a 48 per cent drop in the number of inbound M&A deals, and an 83 per cent drop in deal value, compared to the equivalent period in previous year. This slowdown is attributable to the interaction of a number of factors operating on a global and regional level. On a macroeconomic level, investor confidence has been significantly shaken by changes to the global political landscape, following the outcome of the US presidential election and the UK’s decision to leave the European Union. This uncertainty has been compounded by challenges closer to home, particularly those affecting the economies of regional hubs. South Africa, for example, has entered recession resulting in part from a period of heightened political uncertainty. This, combined with widespread perceptions of corruption, increased currency volatility and a downgrading of its credit rating by a number of rating agencies, has served to cool investor appetite for doing deals in South Africa, seen as a key gateway jurisdiction for M&A in sub-Saharan Africa. Political uncertainty in relation to the current election in Kenya and a rebalancing of Nigeria’s economy, following the drop in commodity prices, is also exerting downward pressure on M&A activity on the continent.

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This article was authored by Gavin Davies, Partner and Global Head of M&A, London, Rudolph du Plessis, Partner, Johannesburg, Hubert Segain, Partner, Paris and Richard Woods, Senior Associate, London in GTDT: Market Intelligence – M&A 2018.

 


 

M&A in Africa: A regional overview 2017

Following a particularly buoyant year for M&A activity across African markets, deal flow seems to have dropped off somewhat in 2016. This slowdown can be understood, in part, by looking to the bigger picture: M&A activity has been sluggish globally and the aggregate values of deals completed in Q1 2016 totalled US$97 billion - lower than the same period in the previous year. A number of other factors underlie this slowdown, not least the rebalancing of China's economy, uncertainty caused by Brexit and recent negative market reactions to the stock price of bidders offering, on average, higher prices to acquire companies this year compared with 2015. Low commodity prices and general anxiety about the health of the financial sector have also contributed to the decline in the level of activity.

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This article was authored by Gavin Davies, Partner, London, Frederic Bouvet, Partner, Paris and Richard Woods, Senior Associate, London in GTDT: Market Intelligence – M&A 2017.


 

M&A in Africa: A regional overview 2016

This article looks at the trends in activity levels for M&A in Africa, looking at sectors that have been particularly active, recent developments in the commercial and regulatory landscape and examining the future of M&A in Africa.

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This article was authored by Gavin Davies, Partner, London and Hubert Segain, Managing Partner, Paris in GTDT: Market Intelligence – M&A 2016.


 

M&A in Africa 2015

Levels of M&A activity in Africa have been increasing in recent years and are expected to continue to grow, notwithstanding recent challenges to economic growth such as the outbreak of the Ebola crisis, pockets of political unrest and lower commodity prices. Investors retain confidence in the longer term prospects for the region.

In this article, we look at the factors behind the recent growth in M&A activity in Africa, the challenges associated with African M&A, and how those risks can be managed.

Ten Reasons Why M&A in Africa is Different

  1. The approach to the legal environment needs careful thought.
  2. There will be a wider range of regulatory issues to consider.
  3. Governments are more likely to be significant constituents in the deal.
  4. The structure of deals may be more complicated.
  5. A pragmatic approach to managing financing risks will be necessary.
  6. Risk will be the predominant concern for the purchaser’s board/investment committee.
  7. Assessment and mitigation of social and environmental risks (and addressing local content requirements) should be a priority.
  8. There are areas where the local legal system and practice may differ significantly from previous experience.
  9. Multi-jurisdictional deals may prove particularly complex.
  10. A range of practical differences may make the process more difficult.

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This article was authored by Gavin Davies, Partner, London and Hubert Segain, Managing partner, Paris in the ICLG M&A Guide 2015.

For more related articles, please visit our Cross Border M&A hub.

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