World leading audit, financial and tax advisory firm KPMG, has reported that the total financial value of mergers and acquisitions (M&A) recorded in Nigeria for 2012 surged by 379 percent to $7.415 billion, compared to the $1.548 billion recorded in 2011.
KPMG stated this in a report made available to THISDAY, titled: “Analysis of M&A and Investment Activities in Nigeria for the fourth quarter 2012.”
According to the report, the oil and gas sector accounted for 77 percent of the total value of the M&A, following a 62 percent contribution in the previous year. The consumer market on the other hand dropped 6 percent after recording a 16 percent contribution to total financial value in 2011.
The heavily financed deals that took place in the oil and gas sector were driven by indigenous and foreign companies seeking to acquire upstream oil and gas assets of International Oil Companies.
The largest acquisition was by China Petroleum Corporation (Sinopec). In a bid to increase oil sources for the energy giant, Sinopec paid $2.5 billion for a 20 percent holding of Total Nigeria’s OML 138 oil block.
Oando Energy Resources, an indigenous energy firm in the second-largest acquisition of the year paid $1.8 billion for Conoco-Philips’ Nigerian operations.
A few other major deals recorded in other sectors include Shanduka Group’s $335 million investment in telecoms giant MTN; and Starcomms, Multilinks and MTS merger.
The report also forecasts that in 2013: “The nationalised bank may be involved in M & A transactions following the release of a transaction roadmap for divestment of government interest in the banks. In addition, the need for mortgage institutions to comply with the 2013 recapitalisation deadline is expected to spur M & A activities.”
“Government implementation of import substitution strategies and promotion of agriculture is expected to be a key driver of M&A in the consumer market sector,” it furthered.
Notably, the total volume of M&A in the country increased from 29 in 2011 to 37 in 2012.
Both in 2011 and 2012, the financial services and consumer markets accounted for most of the numbers of the deals in 2011 and 2012.
