Egypt M&A Activity Decline by 53% in 2023, Says Baker McKenzie

Egypt’s merger and acquisitions (M&A) in the second half of 2023 witnessed a 32% increase in deal volume to 79 deals compared with 60 deals in H1-2023, while the total value surged by 383% to $2.8 billion compared with $597 million, according to the latest report by global law firm Baker McKenzie.

However, for the full year 2023, both total volume and deal value declined by 53% (139 deals) and 62% ($3.48 billion), respectively, the report, which was based on London School of Economics Group (LSEG) data for globally announced M&A transactions, said.

In the Middle East, deal-making in 2023 decreased by 4.7% in terms of deal volume and by 2.2% in terms of deal value. The decline in Middle East’s overall M&A deal volume is attributed to the stagnant performance of domestic deal volume and a 7% decline in cross-border deal volume.

Commenting on Egypt’s M&A deals activity, Mohamed Ghannam, Managing Partner at Helmy, Hamza & Partners, Baker McKenzie Cairo said that in the face of the global downturn in M&A activity, the Middle East’s performance reflects a nuanced landscape, with a slight reduction in deal volume offset by a resilient average deal value.

“Further, despite the decline in Egypt’s deal volumes over the full year, the significant growth in total value in the second half of 2023 suggests strategic growth and impactful deals taking place,” Ghannam said.

Hani Nassef, M&A Partner at Helmy, Hamza & Partners, Baker McKenzie Cairo, said that while the M&A landscape in Egypt faced notable challenges throughout 2023, the surge in total value in the second half of the year signals resilience and opportunities within the market.

“Additionally, globally and in the Middle East, the fluctuations observed emphasise the dynamic nature of the M&A environment, with varying impacts on both domestic and cross-border transactions,” Nassef said.

Cross Border Deals in Middle East

In the Middle East, the majority of deals for 2023 were cross-border in nature spurred by a strategic quest for diverse investment opportunities, access to new markets and the pursuit of synergies amidst a globally interconnected business landscape.

Despite a slightly lower volume in 2023 compared with the previous year, cross-border deals targeting the Middle East saw a modest improvement in terms of values. Deal values decreased by 7% with 604 deals, compared to 650 deals, amounting at $56.6 billion as against $52.8 billion in FY 2022.

In terms of intra-regional deals, volumes and values in 2023 decreased to 69 deals at $2.1 billion from 78 deals valued at $5.4 billion in 2022.

Saudi Arabia emerged as the leading intra-regional acquirer in the Middle East (excluding Israel) during the year, securing 25 deals. It was closely followed by the UAE with 23 and Bahrain with 8 deals. Additionally, the UAE claimed the top position as the leading intra-regional target destination in the region, with 27 deals, followed by Saudi Arabia with 19 and Bahrain 4 deals.

Karim Nassar from Baker McKenzie in Saudi Arabia, said that Saudi Arabia’s prominence as the leading intra-regional acquirer underscored the strategic vision of businesses in the Kingdom. It reflects the Kingdom’s commitment to regional collaboration and its position as a key player in driving inter-Middle East investments.