In the latest update from EY MENA M&A Insights 12M 2023, the MENA region has showcased a robust M&A market, with the total deal value for 2023 reaching a substantial US$86.0 billion, marking a notable 4% increase compared to the previous year. The GCC region, in particular, stood out, accounting for the lion's share of deals at 565, valued at an impressive US$83.2 billion.
Despite geopolitical tensions and economic uncertainties prevailing in global markets, M&A activity in 2023 remained resilient. Domestic deals took the lead in terms of volume, constituting 49% of the total, while cross-border M&As dominated in terms of overall value, contributing to a significant 72%. The surge in cross-border deal value, up by 14% year on year, underscores companies' endeavors to attain strategic advantages on a global scale.
Leading the charge in the region's deal activity were Sovereign Wealth Funds (SWFs), including prominent entities such as the Abu Dhabi Investment Authority (ADIA), Mubadala from the UAE, the Public Investment Fund (PIF) from Saudi Arabia, and the Qatar Investment Authority (QIA). These funds played a pivotal role in bolstering deal activities to support their respective countries' economic strategies.
The UAE claimed the spotlight with the region's largest M&A transaction of the year, involving the acquisition of Univar Solutions by Apollo Global Management and ADIA for a staggering US$8.2 billion. Following closely behind was the acquisition of US mobile games developer Scopely, Inc. by PIF-owned Savvy Games Group for US$4.9 billion. The UAE's Cvent Holding also saw a significant acquisition by Blackstone and ADIA, closing the top three deals with a value of US$4.7 billion.
Outbound deals emerged as the primary contributor to the M&A deal value in 2023, totaling 208 deals amounting to US$53.5 billion. In terms of sectors, technology led in volume with 141 deals, while chemicals ranked first in deal value, hitting US$17 billion.
North America maintained its position as the largest acquiring region by value, with transactions worth US$2.7 billion and the highest number of inbound MENA deals, totaling 32.
Commenting on the findings, Brad Watson, EY MENA Strategy and Transactions Leader, expressed optimism about the future of M&A activity in the region, stating, "Dealmaking remained strong in 2023. SWFs led M&A activity in MENA with a focus on national development and investing in sectors of the future. We expect M&A activity in MENA to remain robust in 2024 given continuing secular trends around energy transition and digitalization of everything."
The UAE and Saudi Arabia emerged as favored investment destinations, with the UAE attracting investors due to its business-friendly regulations and efficient legal framework. In 2023, the US stood out as the favorite target destination for UAE investors, with 21 deals amounting to US$15.3 billion in total value. Meanwhile, Saudi Arabia reported significant combined deal volume and value at 305 deals and US$24.8 billion, respectively, solidifying its position in the M&A landscape.
The energy and resources sector took center stage in MENA's M&A landscape, with significant capital deployment evident across various segments. Oil and gas inbound deals saw a notable surge in volume and value, with TotalEnergies SE's acquisition of stakes in several oil fields contributing substantially to the sector's inbound deal value.
Additionally, the chemicals sector witnessed a remarkable rise in deal value, with ADNOC's acquisition of a 50% stake in Fertiglobe for US$3.7 billion marking a significant milestone in achieving the region's chemicals strategy and energy transition goals.
Anil Menon, EY MENA Head of M&A and Equity Capital Markets Leader, concluded, "The MENA M&A market demonstrated remarkable resilience in spite of regional political tensions and global economic uncertainty. Confidence in regional boardrooms remains high, as Saudi Arabia and the UAE embark on the greatest renaissance any region has undertaken."
