The Middle East and North Africa (MENA) region witnessed an increase in merger and acquisition (M&A) activity with a total of 522 deals amounting to $71 billion during the first nine months (9M) of 2024. When compared to the same period in 2023, deal volume this year grew by 9 percent, while deal value saw a 7 percent rise.
According to the EY MENA M&A Insights 9M 2024 report, the UAE and Saudi Arabia were the preferred destinations for investors due to their favorable business policies, with 239 deals reaching a combined disclosed value of $24.5 billion. The two countries were also among the top MENA bidder countries in terms of deal volume and value, representing 52 percent and 81 percent of the total, respectively.
“Deal activity in the MENA region has seen a notable improvement this year, driven by strategic policy shifts, the liberalization of investment regulations and robust capital inflows from investors, ” stated Brad Watson, EY MENA strategy and transactions leader.
Sovereign wealth funds lead M&A activity
Sovereign wealth funds (SWFs), such as Abu Dhabi Investment Authority (ADIA) and Mubadala from the UAE, and the Public Investment Fund (PIF) from Saudi Arabia, continued to lead MENA M&A deal activity to support their countries’ economic strategies.
During the first nine months of 2024, cross-border M&As in the MENA region also played a significant role, contributing 52 percent of the overall volume and 73 percent of the value. Meanwhile, domestic M&A value increased year-on-year by 44 percent to $19.3 billion, primarily driven by government-related entity transactions in the oil and gas, metals and mining, and chemicals sectors. Domestic M&A activity accounted for 48 percent of the total number of deals.
“With companies actively seeking opportunities to grow and diversify their operations, we have observed a surge in cross-border M&A volume and value. In particular, the UAE remained a favored investment destination during the first nine months of 2024 due to its business-friendly regulations and efficient legislative framework.”
U.S.-UAE Business Council drives deal growth
The United States remained the preferred target destination for MENA investors with 32 M&A deals amounting to $18.3 billion. With the U.S.-UAE Business Council playing an active role in promoting partnerships, prominent U.S. companies are collaborating with the UAE public and private sector stakeholders on various initiatives.
“Meanwhile, strengthening regional relationships with Asian and European economies, alongside existing ties with the U.S., enabled MENA countries to gain access to larger and growing markets,” added Watson.
Top 10 M&As concentrated in the GCC region
Ten of the MENA region’s highest-valued M&As in 9M 2024 were concentrated in the GCC. The largest transaction took place in February 2024, when Clayton Dubilier & Rice, Stone Point Capital, and Mubadala Investment announced their acquisition of Truist Insurance Holdings for $12.4 billion.
Meanwhile, Saudi Arabia recorded the largest disclosed domestic deal with Saudi Aramco’s acquisition of a 22.5 percent stake in Rabigh Refining and Petrochemical Company from Tokyo-based Sumitomo Chemical for $8.9 billion.
In March 2024, PAG, Mubadala, and ADIA also invested $8.3 billion in a 60 percent stake in the Chinese shopping mall company Zhuhai Wanda Commercial Management Group. Insurance and oil and gas were the most attractive sectors for investors in the fist nine months of 2024, representing 34 percent of total deal value.
“The MENA M&A market is extremely buoyant and we expect to end the year with more than 700 deals, which will be very close to the historic five-year high of 750 deals. This is a remarkable achievement in the context of uncertain geopolitics and higher cost of capital,” stated Anil Menon, EY MENA head of M&A and equity capital markets leader.
U.S. and U.K. lead inbound deal volume
With MENA emerging as one of the most attractive destinations for foreign direct investment (FDI), inbound deals towards the region in the first nine months of this year rose by 20 percent annually in terms of volume. Meanwhile, deal value surged by 47 percent compared to the same period in 2023. The first three quarters of 2024 recorded 127 inbound deals with a total disclosed value of $10.4 billion.
The U.S. and the U.K. accounted for 42 percent of total inbound M&A activity in the MENA region. With increased FDI flows in the private sector, the UAE represented 60 percent of the total inbound M&A volume and 67 percent of the value.
Meanwhile, outbound activity was the largest contributor to total deal value at 58 percent, with 147 deals that amounted to $41.4 billion. Asia and North America together contributed 46 percent and 77 percent of the total outbound deals by volume and value respectively.
