Despite the higher cost of capital, regional merger and acquisition (M&A) activity remained robust in the first half of 2024.
The MENA region accounted for 321 deals amounting to $49.2 billion, reflecting a 1 percent growth in deal volume and a 12 percent rise in deal value compared to the first half of 2023. This was revealed by Ernst & Young’s (EY) MENA M&A Insights H1 2024.
The United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) accounted for nearly half the number of deals. The two countries emerged as preferred destinations for investors with 152 deals reaching a total disclosed value of $9.8 billion.
UAE, Saudi Arabia among top MENA bidder countries
The two countries were also among the top MENA bidder countries in terms of deal volume and value, with sovereign wealth funds (SWFs) like Abu Dhabi Investment Authority (ADIA) and Mubadala from the UAE and the Public Investment Fund (PIF) from KSA leading deal activities in the region to support their countries’ economic strategies.
Saudi Arabia led in the lists of target countries as well as bidder countries, with the UAE, Morocco, Bahrain and Egypt featured in both rankings as well.
There were 94 deals within and between the UAE and KSA, accounting for 61 percent of the overall domestic M&A deal volume.
The GCC region accounted for all 10 of the highest-valued M&As in the MENA region, with the largest transaction being the $12.4 billion acquisition of Truist Insurance Holdings by Clayton Dubilier & Rice, Stone Point Capital and Mubadala Investment in February this year.
The top-three M&As in the region was rounded off by PAG, Mubadala and ADIA acquiring a 60 percent stake in the Chinese shopping mall company Zhuhai Wanda Commercial Management Group for $8.3 billion, followed by Abu Dhabi Future Energy Company (Masdar) 67 percent stake in the Greek company Terna Energy for $2.9 billion in June 2024.
Cross-border M&As contributed to 52 percent of the overall volume and 87 percent of the value – thus marking a 15 percent YoY growth in value – while domestic M&A activity accounted for 48 percent of the total number of deals.
Brad Watson, EY MENA Strategy and Transactions Leader, commented: “Dealmaking got off to a promising start in 2024 despite oil price fluctuations. We saw a surge in cross-border M&A value as companies made investments to further build synergies, expand market presence, and gain strategic advantages on a global scale.
“In particular, the first half of the year found the UAE to be a favoured investment destination due to its business-friendly regulations and efficient legislative framework. Meanwhile, MENA countries continued to strengthen regional relationships with Asian and European countries, alongside existing ties with the US, enabling them to gain access to larger and growing markets.”
The United States of America (US) remained the preferred target destination for MENA outbound investors with 19 deals worth $16.6 billion.
Insurance and real estate were the most attractive sectors for investors in the first six months of the year, making up for 47 percent of the total deal value.
The real estate (including hospitality and leisure) sector became the main contributor to deal value with 15 deals amounting to $1.3 billion, driven by increasing tourism, upcoming mega projects and a growing middle-class income. The consumer products and technology sectors witnessed 47 deals in the domestic market, representing 30 percent of the total volume.
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