According to the EY MENA M&A Insights 12M 2023 update, the MENA region witnessed a steady M&A market with total deal value for 2023 reaching US$86.0b, indicating a 4% increase on previous year. The GCC region accounted for the majority of deals at 565, valued at US$83.2b.
M&A activity in 2023 remained buoyant as dealmakers shrugged geopolitical tensions, rising cost of capital and general economic uncertainty in western markets. Domestic deals dominated the region in terms of volume at 49%, while cross-border M&As contributed to 72% of overall value. With companies seeking to gain strategic advantages on a global scale, cross-border deal value rose by 14% year on year (y-o-y).
Sovereign wealth funds (SWFs), such as Abu Dhabi Investment Authority (ADIA) and Mubadala from the (UAE), the Public Investment Fund (PIF) from the Kingdom of Saudi Arabia (KSA) and Qatar Investment Authority (QIA), continued to lead the deal activity in the region to support their countries’ economic strategies.
The UAE reported the region’s largest M&A of the year with the announced acquisition of Univar Solutions by Apollo Global Management and ADIA for US$8.2b. This was followed by the acquisition of the US mobile games developer Scopely, Inc. by PIF-owned Savvy Games Group for US$4.9b, and the acquisition of the UAE’s Cvent Holding by Blackstone and ADIA for US$4.7b closing the top three.
Outbound deals contributed the largest share of the M&A deal value in 2023. A total of 208 deals amounted to US$53.5b.
In terms of sectors, technology accounted for most of the volume with 141 deals, while chemicals ranked first in deal value with US$17b.
North America remained the largest acquiring region by value with transactions worth a total of US$2.7b and the highest number of inbound MENA deals with 32.
Brad Watson, EY MENA Strategy and Transactions Leader, says:
“Dealmaking remained strong in 2023. SWFs led M&A activity in MENA with focus on national development and investing in sectors of the future. We expect M&A activity in MENA to remain robust in 2024 given continuing secular trends around energy transition and digitalization of everything.”
The UAE and KSA among favorite investment destinations
The UAE consolidated its status as the preferred destination for investors due to its business-friendly regulations and efficient legal framework. In 2023, the US was the favorite target destination for the UAE investors with 21 deals that amounted to US$15.3b in total value. The US-UAE Business Council actively promotes partnerships between the two countries.
Another popular investment destination in the region was KSA. The UAE and KSA reported significant combined deal volume at 305 and deal value of US$24.8b. The two countries were also among the top MENA bidders, indicating their active participation in the M&A landscape.
M&A in Energy & Resources takes center stage
The regions focus on energy and resources was clearly evident with significant capital deployment across the Energy & Resources spectrum.
Oil and gas inbound deals witnessed an increase in volume as well as value in 2023. The acquisition of stakes in oil fields Satah Al Razboot (20%), Mubarraz (12.9%), Umm Lulu (20%), Bin Nasher (20%) and Al Bateel (20%) by TotalEnergies SE for US$1.6b contributed to 97% of inbound deal value in this space.
The chemicals sector reported a significant rise in deal value, totaling US$4.7b. Notably, Abu Dhabi National Oil Company (ADNOC) acquired a 50% stake in Fertiglobe for US$3.7b with the aim to achieve its chemicals strategy and energy transition goals, marking the largest domestic deal of 2023.
The metals and mining sector recorded four deals worth US$3.4b, an increase from two deals in 2022. PIF acquired the Saudi Iron & Steel Company (Hadeed) for US$3.3b to accelerate KSA’s industrial development. This is consistent with regional SWFs creating national champions i.e. local platforms that gain competitive edge via scale.
Anil Menon, EY MENA Head of M&A and Equity Capital Markets Leader, says:
“The MENA M&A market demonstrated remarkable resilience in spite of regional political tensions and global economic uncertainty. Confidence in regional board rooms remains high, as Saudi Arabia and the UAE embark on the greatest renaissance any region has undertaken.”
