Why mergers and acquisitions have plummeted in S.Africa - CNBC Africa

Why mergers and acquisitions have plummeted in S.Africa


by Trust Matsilele 0

S.Africa sees a strain in the M&A space. PHOTO: thebluediamondgallery

South Africa saw a drastic drop in mergers and acquisitions (M&As) in the last quarter and this has partly being influenced by political instability and regulatory uncertainty, according to Morne Van Der Merwe, Partner, Baker & Mckenzie. 

“What is interesting to note is that, from a global point of view, the active buyers are China and Canada with Europe and North America being parts of the world were a lot of assets are being targeted,” he told CNBC Africa.

“Regulatory uncertainty in important sectors especially in the mining sector has had a very significant impact, in South Africa, as this informs who invests and who doesn’t,” he said.

He added that inbound activities are important to look at as countries like United Arab Emirates, Germany and United Kingdom were the ones investing in South Africa.

“The question is, where is the United States and China investing? China is looking at Europe as there are a lot of attractive and fairly priced assets,” he added.

“I don’t think they are looking at South Africa at the moment as there is so much uncertainty in traditional sectors that used to attract M&As such as mining and agriculture. Sectors that are receiving attention are internet, e-commerce and pharmaceuticals.

He said South Africa and the rest of Africa was trailing other global players as far as the M&A space is concerned.

 “South Africa forms a very small pie of the global mergers and acquisition activities. South Africa is down 90 per cent this quarter to where it was the same quarter last year.”