EY: MENA region recorded 524 M&A deals worth $55.2 billion ‎in 9 months

The Ernst & Young (EY) MENA M&A Report revealed that 524 deals were registered in the first nine months of 2022 with a total value of $55.2 billion.

The number of Mergers and Acquisitions transactions rose slightly by 1% year-on-year, on the back of continued inflation pressures, a slowing economy, and global market turmoil. While the total value of deals decreased by 23% compared to the same period last year.

The report also showed that the announced local mergers and acquisitions deals were the most recorded, as they constituted 51% of the total number of deals, while their value constituted 33% of the total value of the announced deals in the region in the first nine months of 2022.

Mergers and acquisitions deals in private equity and sovereign wealth funds represented 35% of the total number of deals announced in the first nine months of 2022 and 38% of their value. While government-related institutions accounted for 38% of the total value of deals announced in this period, with deals recorded with a total value of $21 billion.

Commenting on the report, Brad Watson, Head of Deals and Strategy for MENA at EY, said: “Despite the global economic uncertainty we are experiencing, the MENA region continues to record higher transaction activity in mergers and acquisitions, against the backdrop of the expected economic growth led by high oil prices, and the acceleration of the implementation of reforms in the interest of business. In addition, we are witnessing a growth in deals in the technology sector, which reflects the acceleration of digital transformation projects in many industries in the region.”

The top five countries in the Middle East and North Africa region in terms of transaction value are the UAE, Egypt, Saudi Arabia, Morocco and Oman

The United Arab Emirates maintained its lead in the list of the five most attractive countries for deals in the Middle East and North Africa region, as it witnessed the registration of 155 deals with a total value of $17.2 billion in the first nine months of 2022. It was followed by Egypt with 99 deals worth $3.9 billion, Saudi Arabia with 58 deals worth $3.4 billion, Morocco with 22 deals worth $1.9 billion, and the Sultanate of Oman with 10 deals worth $0.7 billion.

The top five sub-sectors in the MENA region by value of announced deals include transportation, real estate, consumer products, technology, banking and capital markets.

Anil Menon, Head of MENA Capital and M&A Advisory Services at EY, said: “What is interesting about these recent results is the increase in M&A activity, not just from traditional markets like the UAE. The United Arab Emirates and Saudi Arabia, but also in other countries in the Middle East and North Africa, such as Egypt, Morocco, Qatar and Oman. The rise in crude oil prices, as well as government initiatives to attract investments to the region, and the search by investors in the Middle East and North Africa region for future investment opportunities in foreign markets, is the main driver of the growing activity of mergers and acquisitions in the region in the future.”

Local Deals in the Middle East and North Africa

Local mergers and acquisitions transactions recorded a slight decline of 3% in the first nine months of 2022, with 268 local deals compared to 275 deals in the same period of the previous year. The value of these deals also decreased by 48%, recording $18 billion, compared to $34.6 billion in the first nine months of 2021. With the exception of Air Products & Chemicals’ acquisition of facilities and energy assets from Aramco, worth 12 During the first nine months of 2021, the value of domestic deals decreased by 20% in the first nine months of 2022.

Egypt witnessed a 37% rise in local deal activity in terms of the number of deals registered in the first nine months of 2022. The Egyptian government’s decision to sell several state-owned industries to help its faltering economy has attracted Gulf investors.

The first nine months of 2022 witnessed the acquisition of a company management company, Tamween, in a deal worth $2.4 billion, and Emaar Properties acquired Dubai Creek Harbor in a deal worth $2.042 billion. Q Holdings also acquired Reem Investments for $1.6 billion. The Saudi Public Investment Fund acquired 16.8% of the shares of Kingdom Holding Company for $1.5 billion, and Alpha Abu Dhabi Holding Company acquired 17% of the shares of Aldar Properties for $1.452 billion.

Inbound deals to the Middle East and North Africa

The acceleration in the implementation of business-friendly reforms in the region and the rise in oil prices, in addition to the easing of travel restrictions increased the volume of incoming deals in the Middle East and North Africa, with 119 deals recorded in the first nine months of 2022 compared to 105 deals in the Middle East and North Africa region during the same period last year.

The UAE has maintained its position as the preferred investment destination for such deals, with 62 deals worth $7.4 billion recorded during the first nine months of 2022, against the backdrop of reforms aimed at enhancing the business environment, attracting foreign investments, and motivating companies to establish or expand its operations in the Emirates. The technology sector witnessed the highest activity in terms of the number of deals, as the UAE alone attracted 23 deals out of 37 deals in the technology sector, which reflects the desire of the region’s governments to enhance their digital transformation programs.

US-based companies are driving inbound deal activity in the MENA region

US-based institutions and companies were the most active investors in the MENA region in terms of the number of M&A deals, dominating 30% of incoming deals, with a particular focus on technology-related investments. Canada led the way in terms of value of deals, with four deals worth $5.7 billion recorded, the largest of which was the Canadian company Caisse de Depot et Placement du Quebec’s acquisition of a 22% stake in the Jebel Ali Free Zone, and 22 % of the National Industries Complex, and 22% of Jebel Ali Port, in a deal signed last June, worth 5 billion US dollars.

The top five sub-sectors by value of announced inbound deals were: other transportation with $5 billion deals, energy and utilities with $1.7 billion deals, technology with $1.5 billion, and chemicals with $0.6 billion deals And real estate deals worth $0.4 billion

Outgoing deals from the Middle East and North Africa region

During the first nine months of 2022, the Middle East and North Africa region witnessed the registration of 137 outbound deals worth $27.2 billion, compared to 113 deals worth $11.9 billion in the same period in 2021. The United Arab Emirates attracted the largest number of outbound deals, led by the technology sector, professional services companies and real estate, which accounted for 43% of the number of outbound deals.

The UAE also witnessed the largest outbound deal signed in May 2022, with Emirates Telecommunications Company acquiring a 9.8% stake in the British Vodafone Group, in a deal worth $4.398 billion.

The top five sub-sectors in terms of the value of announced outbound deals were: telecommunications with $4.4 billion, energy and utilities with deals worth $4.4 billion, media and entertainment with deals worth $3.5 billion, and chemicals with deals worth $3.2 billion US dollars, airlines with 2.2 billion US dollars.

This report is a summary of the activities of mergers and acquisitions announced in the Middle East and North Africa (the region that includes Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, the Sultanate of Oman and the Palestinian regions, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates and Yemen). It is worth noting that transactions with a value of less than $5 million and not exceeding the acquisition of a 5% stake were not considered in this study.