However, M&A activities recorded deals worth $12 billion in the second quarter alone, an 85 percent increase over the previous quarter, said the report released by professional services firm Ernst & Young on Tuesday.

In terms of numbers, there was a 12 percent decline between the two quarters, from 76 deals in the first quarter to 67 deals in the second quarter of this year, the report added.

“Fewer deals took place in the second quarter compared to the first quarter, but their value was significantly higher,” said Phil Gandier, head of Transaction Advisory Services at Ernst & Young MENA.

“Despite a decline in the number of deals in the past six quarters, deal value has now increased to its second highest since the first quarter of 2009,” he added.

“Domestic and inbound deals have dropped in volume and value compared to the second quarter of 2009, but outbound transactions have increased as regional investors increasingly invest overseas.”

The countries that experienced a large degree of domestic activity in terms of number of transactions in the second quarter were Kuwait with seven deals, followed by Jordan five deals, and Egypt, Saudi Arabia and the UAE with three deals each.

The report said Egypt, Saudi Arabia, Qatar and Jordan were the most active markets in the region.

Egypt ranked highest in the region in terms of deal value, comprising approximately 28 percent of the total disclosed deal value with $624 million. Oman closely followed at 23 percent with $525 million and the UAE at 16 percent with $372 million.

Domestic transactions by volume, comprising 45 percent of total announced deals in the second quarter, outnumbered inbound and outbound deal activity, as was the case during the corresponding period last year.

Outbound deals formed a major share of the total deals at $9.1 billion, or 76 percent of the total announced deal value in the second quarter. Domestic activities saw the highest deal value, averaging at approximately 47 percent of total announced deal values during the corresponding period last year.

The sectors that attracted the most inbound activities in the second quarter were diversified industrial products with three deals and consumer products with two deals, said the report.

The sector with the greatest inbound activities in the second quarter in terms of value was mining with deals worth $464 million.

The other two sectors with the highest value in inbound transactions were diversified industrial products (worth $57.5 million) and banking and capital markets (worth $30 million).

In July, a report by Zephyr said the value of M&A activities targeting the Middle East witnessed a 38 percent drop despite an 86 percent increase in volume. In the first half of 2010, M&A activity in the region was put at $12 billion through 229 deals compared to $11.42 billion through 132 deals during the corresponding period last year.