UAE, Saudi Arabia Lead MENA’s M&A Activity in 9M-2024

Mergers and acquisitions in the Middle East and North Africa (MENA) region witnessed an increase in activity with a total of 522 deals amounting to $71 billion in the first nine months of this year.

When compared to the same period in 2023, deal volume this year grew by 9%, while deal value saw a 7% rise, according to the Ernst & Young (EY) MENA M&A Insights 9M 2024 report.

The UAE and Saudi Arabia were the preferred destinations for investors due to their favourable business policies, with 239 deals reaching a combined disclosed value of $24.5 billion. They were also among the top MENA bidder countries in terms of deal volume and value, representing 52% and 81% of the total respectively.

Sovereign wealth funds (SWFs) such as Abu Dhabi Investment Authority (ADIA) and Mubadala from the UAE and Saudi Arabia’s Public Investment Fund (PIF), continued to lead the deal activity in the region to support their countries’ economic strategies.

During the first nine months of 2024, cross-border M&As played a significant role, contributing 52% of the overall volume and 73% of the value, the report said.

Meanwhile, domestic M&A value increased y-o-y by 44% to reach $19.3 billion, primarily driven by government-related entities (GREs) transactions in the oil and gas, metals and mining, and chemicals sectors. Domestic M&A activity accounted for 48% of the total number of deals.

“The US remained the preferred target destination for MENA investors with 32 deals amounting to $18.3 billion. With the US-UAE Business Council playing an active role in promoting partnerships, prominent US companies are collaborating with the UAE public and private sector stakeholders on various initiatives,” the report noted.

Brad Watson, EY MENA Strategy and Transactions Leader, said that deal activity in the region has seen a notable improvement this year, driven by strategic policy shifts, the liberalisation of investment regulations and robust capital inflows from investors.

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 favoured investment destination due to its business-friendly regulations and efficient legislative framework. Meanwhile, strengthening regional relationships with Asian and European economies, alongside existing ties with the US, enabled MENA countries to gain access to larger and growing markets,” Watson said.

GCC’s Top 10 M&As

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% stake in Rabigh Refining and Petrochemical Company from Tokyo-based Sumitomo Chemical for $8.9 billion.

In March 2024, PAG, Mubadala and ADIA invested $8.3 billion in a 60% stake in the Chinese shopping mall company Zhuhai Wanda Commercial Management Group.

Domestic Deals Grow

The 9M-2024 saw 248 domestic deals with a combined disclosed value of $19.3 billion, marking a 7% increase in M&A activity. GCC players were involved in 81% of the deals, reflecting a high level of intra-regional M&A activity. There were 139 deals within and between the UAE and Saudi Arabia, accounting for 56% of the overall domestic M&A volume.

With increasing emphasis on digital transformation and shifting consumer patterns, technology and consumer products witnessed 78 deals, representing 31% of the total domestic M&A volume. Meanwhile, the oil and gas, and metals and mining sectors became the major contributors in terms of M&A value with 19 deals amounting to $10.9 billion.

US and UK Investments

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% y-o-y in terms of volume. Meanwhile, deal value surged by 47% 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 report said.

The US and the UK together accounted for 42% of total inbound M&A activity. The technology and professional firms and services sectors reported the highest deal volume and value, contributing 48% and 39% respectively.

The US contributed 33% of the total deal volume in these sectors, with 80% of these deals being partnerships with the UAE, showcasing strong the US interest in the UAE’s technology and professional services, driven by rising digitalisation and artificial intelligence (AI) adoption.

With increased FDI flows in the private sector, the UAE represented 60% of the total inbound M&A volume and 67% of the value.

Outbound Deals

During the first 9M of 2024, outbound activity was the largest contributor to total deal value at 58%, with 147 deals that amounted to $41.4 billion. Insurance and real estate accounted for 50% of the deal value in this space, mainly resulting from two mega investments involving MENA-based SWFs.