MENA Witnesses Record M&A Deals in Q1-2025

The Middle East and North Africa (MENA) region witnessed 225 merger & acquisition (M&A) deals in Q1 of 2025, up from the 172 deals recorded in Q1 of 2024, reflecting a 31% increase in deal volume when compared year-on-year (y-o-y).

According to the latest EY MENA M&A Insights 2024 report, the total deal value rose by 66% to $46 billion in the first quarter, compared with $27.6 billion in the corresponding last year.

Cross-border deals were the primary driver of M&A activity in the MENA region, contributing 52% of total deal volume with 117 deals and 81% of total deal value at $37.3 billion. The first quarter 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.

Brad Watson, MENA EY-Parthenon Leader, said that they saw a steady flow of M&A deals in 2024 and the MENA region continued to exhibit a robust influx of transactions in 2025. This was supported by regulatory reforms, policy shifts and a favourable macroeconomic outlook, including easing interest rates and improved investor sentiment.

This growth is also reflected in the steady increase of domestic M&A activity, which contributed 48% of total deal volume in Q1 of 2025. The rise in domestic M& deals align with the International Monetary Fund (IMF) projection that MENA GDP will grow by 3.6% this year and is further supported by the strong global M&A momentum, he said.

The companies are realigning their strategies to better accommodate the need for diversification, digital transformation and the integration of emerging technologies, he added.

In the MENA region, the UAE remained the top target country with 63 deals totalling $20.3 billion in Q1 of 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 US remained the preferred target destination in terms of deal volume.

Sovereign Wealth Funds (SWFs) such as Abu Dhabi Investment Authority (ADIA), Public Investment Fund (PIF) and Mubadala, along with other government-related entities (GREs), remained key M&A drivers in Q1 of 2025, aligning with national economic strategies and diversification goals.

Domestic M&A Activity

In Q1 of 2025, domestic M&A activity in the MENA region witnessed a 20% increase in deal volume while deal value rose significantly reaching $8.7 billion compared with $1.69 billion recorded in Q1 of 2024.

The technology sector led domestic M&A activity in MENA in Q1 2025, contributing 37% of total domestic deal value and 27% 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% stake in Khazna Data Centres, a digital infrastructure provider.

Intraregional deals involving the UAE, Kuwait and Saudi Arabia accounted for 83% of total domestic deal value and 56% of total domestic deal volume, highlighting strong intraregional M&A activity, particularly in the technology, industrials and real estate sectors.

FDI Inflows

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% and deal value reaching $17.6 billion compared with $2.5 billion in Q1 of 2024.

The UAE remains the leading destination for FDI in the MENA region in Q1 2025, capturing 53% of total inbound deal volume and 99% of the total inbound deal value. Austria was the top investor country, accounting for 94% of total inbound deal value, largely driven by a major transaction in the chemicals sector, the report said.