The MENA region witnessed 225 M&A deals in Q1 2025, up from the 172 deals recorded in Q1 2024, reflecting a 31 percent increase in deal volume when compared year-on-year. Total deal value rose by 66 percent to $46 billion in Q1 2025, when compared to $27.6 billion in Q1 2024, according to the latest EY MENA M&A Insights report.
Cross-border deals were the primary driver of M&A activity in the MENA region, contributing 52 percent of total deal volume with 117 deals and 81 percent of total deal value at $37.3 billion.
Q1 2025 also recorded the highest cross-border deal activity both in volume and value when compared to the same period in the past five years, as companies increasingly pursued growth and diversification beyond domestic markets.
“The MENA deal markets remained resilient despite a lack of clarity on two fronts: the impact of monetary policy on cost of capital and the ongoing tariff and trade discussions. The MENA deal book for the remainder of 2025 is promising and we can expect to see increased activity in consumer, technology and energy sectors. In addition, with AI expected to drive material shifts in fundamental value, we can expect to see significant capital allocation in technology,” stated Anil Menon, MENA EY-Parthenon Head of M&A and Equity Capital Markets Leader.
UAE tops region with 63 deals
In the MENA region, the UAE remained the top target country with 63 deals totaling $20.3 billion in Q1 2025. Kuwait ranked second in terms of deal proceeds, reaching $2.3 billion, driven by two major transactions in the diversified industrial products and power and utilities sectors.
During the first three months of 2025, Canada attracted the highest outbound deal value from MENA investors at $6.4 billion, while the U.S. remained the preferred target destination in terms of deal volume.
In addition, Sovereign Wealth Funds such as Abu Dhabi Investment Authority, Public Investment Fund and Mubadala, along with other government-related entities, remained key M&A drivers in Q1 2025, aligning with national economic strategies and diversification goals.
Domestic M&A activity continues growth momentum
In Q1 2025, domestic M&A activity in the MENA region witnessed a 20 percent increase in deal volume while deal value rose significantly, reaching $8.7 billion as compared to $1.69 billion recorded in Q1 2024. The technology sector led domestic M&A activity in MENA in Q1 2025, contributing 37 percent of total domestic deal value and 27 percent of total domestic deal volume.
The largest domestic deal during Q1 2025 was a $2.2 billion acquisition where Group 42, an Abu Dhabi-based AI and cloud computing firm, agreed to acquire a 40 percent stake in Khazna Data Centres, a digital infrastructure provider.
Intraregional deals involving the UAE, Kuwait and Saudi Arabia accounted for 83 percent of total domestic deal value and 56 percent of total domestic deal volume, highlighting strong intraregional M&A activity, particularly in the technology, industrials and real estate sectors.
“The rise in domestic M&A transactions aligns with the International Monetary Fund (IMF) projection that MENA GDP will grow by 3.6 percent this year and is further supported by the strong global M&A momentum. Companies are realigning their strategies to better accommodate the need for diversification, digital transformation and the integration of emerging technologies,” stated Brad Watson, MENA EY-Parthenon Leader.
MENA region remains attractive FDI destination
The report also revealed that the MENA region continues to emerge as one of the most attractive destinations for foreign direct investment (FDI) during the first few months of 2025, with inbound deal volume surging by 21 percent and deal value reaching $17.6 billion, when compared to $2.5 billion in Q1 2024.
The UAE remains the leading destination for FDI in the MENA region in Q1 2025, capturing 53 percent of total inbound deal volume and 99 percent of the total inbound deal value. Austria was the top investor country, accounting for 94 percent of total inbound deal value, largely driven by a major transaction in the chemicals sector.
