- 40% of deals with disclosed values amounted to US$82.6b
- Domestic deals drove volume in the region, representing 51% of total M&A deal volume in 2022
- UAE registered the region’s largest M&A with Caisse de Depot et Placement du Quebec’s acquisition of a 22% stake in each of DP World’s entities, Jebel Ali Free Zone FZE, National Industries Park, and Jebel Ali Port companies, for US$5b
According to the EY MENA M&A Insights 2022 report, the MENA region saw unprecedented M&A activity in 2022 with 754 deals. MENA, which has historically been a 500-600 deals market, recorded 13% growth in deal volume over 2021.
Improving market conditions due to the highest oil prices within the last six years, business-friendly reforms, and easing of government travel restrictions have boosted investor confidence, catalyzing a surge in M&A activity in the region.
Domestic deals represented 51% of the total M&A deal volume at 388 and 34% of the value at US$28.4b. Outbound deals led in value with US$40.1b and a total number of 201, while 165 inbound deals amounted to US$14b in total disclosed value.
The region saw 137 deals involving government-related entities (GRE) in 2022, which was 78% higher than 2021 and the highest number since 2017. GRE-involved deals accounted for 49% of the total disclosed deal value at US$40.3b.
In terms of sectors, technology made up 25% of the total deal volume. In a bid to position itself as a hub for tech start-ups, the MENA region continues to improve ease of doing business while enacting favorable legislation across industries and creating an enabling investment landscape.
The United Arab Emirates (UAE) dominated the lists of target countries as well as bidder countries by value last year, followed by the Kingdom of Saudi Arabia (KSA) in both rankings. Egypt and Oman also made an appearance in the top five MENA target and bidder countries.
The United States had the highest MENA deal number at 35 – out of which 19 were in the technology sector.
Brad Watson, EY MENA Strategy and Transactions Leader, says:
“After a resurgence in 2021, M&A activity in the Middle East reached new heights last year, testifying to the success of companies adjusting their M&A strategies to the needs of the changing market. Continuing a strong run, domestic deals were a significant driver of deal volume in the region. Furthermore, the number of inbound deals in the UAE indicates that non-MENA investors are showing significant interest in the conducive business environment created by its visionary government.”
The UAE sees three of MENA’s largest M&As
The UAE registered three of the region’s largest M&As, led by Canada-based investor Caisse de Depot et Placement du Quebec’s acquisition of a 22% stake in each of DP World’s entities - the Jebel Ali Free Zone FZE, National Industries Park, and Jebel Ali Port companies - for US$5b. Coming second is an outbound deal wherein Emirates Telecommunications Group and Atlas 2022 Holdings acquired a 9.8% stake in Vodaphone Group for U$4.4b. Abu Dhabi National Oil Company’s acquisition of 24.9% stake in OMV AG from local SWF Mubadala for US$4.1b closes the top three deals.
KSA M&As support Vision 2030
In KSA, the Public Investment Fund’s proposed acquisition of a 51% stake in TAWAL aligns with the country’s Vision 2030 that aims to reduce reliance on the oil and gas sector.
Meanwhile, the Saudi Arabian Oil Company’s acquisition of Valvoline’s Global Products business for US$2.7b was a strategic transaction in the oil& gas sector.
Anil Menon, EY MENA Head of M&A and Equity Capital Markets, says:
“The macro-economic challenges in the US and Europe have triggered a retreat of capital to the MENA region with the GREs and regional strategics leading the pack. Large cap players are super active and hunting. The unprecedented volume of deal activity in 2022 is a clear reflection of an exceptionally buoyant deal environment, which we expect will continue in 2023.”
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