MENA M&A activity smashes record to top 700 deals in 2022

The MENA region merger and acquisition (M&A) activity surged by 13 per cent to 754 deals worth $82.5bn in 2022, driven by improving market conditions, business-friendly reforms and easing of travel restrictions which bolstered investor confidence.

Ernst & Young (EY) said that domestic deals represented 34 per cent of the total M&A value at $28.4bn and outbound deals led in value at $40.1bn. Inbound deals amounted to $14bn of the total disclosed value.

The MENA region registered 388 domestic deals in 2022, representing 51 per cent of the total M&A deal volume while a total of 201 outbound deals and 165 inbound deals were recorded in the region, the latest EY data showed.

“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,” said Anil Menon, EY MENA Head of M&A and Equity Capital Markets.

Government-owned entities (GREs), including sovereign wealth funds and national oil companies, were pivotal in MENA dealmaking activity last year.

GREs account for 137 deals or 49 per cent of the total disclosed deal value at $40.3bn. Deals involving GREs in the region rose 78 per cent higher than in 2021 and account for the highest number since 2017.

According to our latest M&A Insights report, the MENA region saw unprecedented M&A activity in 2022 with 754 deals, recording 13% growth in deal volume over 2021. Find out more: https://t.co/bEjH5qYbnA#EYMENA #MnA #mergersacquisitions #BetterWorkingWorld pic.twitter.com/0rY32xC0kv

— EY MENA (@ey_mena) March 6, 2023

The UAE continues to dominate the lists of target countries as well as bidder countries by value in 2022 followed by Saudi Arabia in both rankings, EY said in the report adding that Egypt and Oman are featured in the top five MENA target and bidder countries.

“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,” said Brad Watson, EY MENA Strategy and Transactions Leader.

MENA top M&A deals

Meanwhile, state-backed companies in the UAE and Saudi Arabia’s energy and logistics sectors witnessed the highest deal activity in terms of value last year.

The UAE registered three of the region’s largest M&A deals led by the Canadian pension fund, Caisse de Depot et Placement du Quebec’s $5bn investment in the Dubai-based ports operators for a 22 per cent stake in its Jebel Ali Port, Jebel Ali Free Zone and the National Industries Park entities.

Read: Canada fund CDPQ to invest $5bn in DP World’s Dubai assets

The country’s telecoms giant e& Group and Atlas 2022 Holdings acquired a 9.8 per cent stake in UK’s Vodafone Group for $4.4bn while Abu Dhabi National Oil Company bought 24.9 per cent of Austrian oil and gas group OMV from state-investor Mubadala last December for $4.1bn – closing the MENA’s top three deals.

EY said Saudi Arabia’s M&A deals support the kingdom’s Vision 2030, an inspirational economic reform agenda with diversification at its heart. Saudi Arabia’s sovereign wealth fund the Public Investment Fund’s (PIF) non-binding offer to buy a 51 per cent stake in Saudi Telecom Company’s towers business, TAWAL, aligns with the Gulf state’s Vision 2030 that aims to reduce reliance on the oil and gas sector.

The offer from PIF, which was made in October 2022, is subject to a final agreement and approvals.

Read: Saudi’s PIF offers to buy stake in $5.8bn STC towers unit

Saudi Aramco acquired Valvoline’s Global Products business for $2.7bn in August 2022, a transaction that was closed earlier in March. The acquisition of Valvoline Global Products (VPG) is expected to allow Aramco to bolster its global base oils production and expand its research and development activities.

With a strong economy buoyed by high oil prices, Middle Eastern countries are well positioned to rely on dealmaking to further advance the region’s long-term push to diversify their economies away from reliance on oil revenues while expanding the global footprint of state-owned entities.