The MENA region experienced a modest increase in merger and acquisition (M&A) activity during the first half of 2024, with 321 deals valued at US$49.2 billion, according to the EY MENA M&A Insights H1 2024 report.
This represents a 1% growth in deal volume and a 12% increase in deal value compared to H1 2023.
UAE and KSA: Preferred Investment Destinations
The United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) emerged as the most attractive destinations for investors, accounting for 152 deals worth US$9.8 billion.
These countries also actively participated as bidders, signifying their pivotal role in the regional M&A landscape.
Sovereign wealth funds (SWFs) from both nations, including ADIA, Mubadala, and PIF, continued to spearhead deal activity, aligning with their respective national economic strategies.
Cross-Border M&A Fuels Growth
Cross-border M&As were instrumental in driving both deal volume and value, representing 52% and 87% of the total deals, respectively.
The value of cross-border transactions surged by 15% year-over-year, reflecting companies’ strategic focus on building synergies, expanding market reach, and securing competitive advantages globally.
US Remains Top Target for MENA Outbound Investments
The United States remained the preferred target for MENA outbound investors, attracting 19 deals worth US$16.6 billion.
The US-UAE Business Council played a crucial role in fostering partnerships, facilitating collaborations between prominent US companies and UAE public and private sector stakeholders.
Top 10 M&A Deals Concentrated in GCC
The ten highest-valued M&A transactions in the first half of 2024 were concentrated in the GCC region.
Notably, the largest deal involved the acquisition of Truist Insurance Holdings by Clayton Dubilier & Rice, Stone Point Capital, and Mubadala Investment for US$12.4 billion.
Insurance and Real Estate Sectors Lead in Attractiveness
The insurance and real estate sectors proved most attractive to investors, constituting 47% of the total deal value.
KSA led both as a target and bidder country, while the UAE, Morocco, Bahrain, and Egypt also featured prominently in both rankings.
Domestic Deals on the Rise
Domestic M&A activity also increased, with 155 deals totaling US$6.4 billion, a 13% growth. GCC players were involved in 85% of these deals, highlighting significant intra-regional M&A activity.
The UAE and KSA saw 94 deals between them, representing 61% of the domestic M&A deal volume.
Real Estate and Consumer Products/Technology Sectors Drive Domestic Deals
The real estate sector, including hospitality and leisure, emerged as the main contributor to domestic deal value, driven by factors such as increasing tourism, upcoming mega-projects, and a growing middle-class income.
Additionally, the consumer products and technology sectors witnessed considerable activity, with 47 deals accounting for 30% of the total domestic volume.
North America and Europe Dominate Inbound Deals
Inbound deals from North America and Europe totaled 70, with a combined disclosed value of US$6.4 billion. While Europe led in terms of deal volume with 80%, North America contributed the most value at 98%.
Professional firms and services recorded the highest volume and value, primarily in the UAE, while the technology sector also saw significant activity, fueled by US-UAE partnerships and increasing AI investments in the UAE.
Outbound Deals Remain Robust
Outbound M&A activity remained robust, contributing the most to total deal value with 96 deals worth US$36.3 billion, representing a 19% increase in value compared to H1 2023.
Insurance and real estate dominated this space, mainly due to deals involving MENA-based SWFs. The US and China accounted for 75% of the total outbound deal value.
Continued Resilience Despite Higher Capital Costs
Anil Menon, EY MENA Head of M&A and Equity Capital Markets Leader, noted the resilience of the regional M&A markets despite higher capital costs. He attributed this to stable oil prices and ongoing infrastructure spending by local governments.