Saudi Arabia and the UAE Top Middle East’s 2023 M&A Activity

Increasing trade agreements and shifts of financing have seen Saudi Arabia and the UAE lead the Middle East’s US$43.8 billion mergers and acquisition (M&A) sector in 2023.

According to the EY MENA M&A Insights H1 2023 update, the MENA region witnessed a total of 318 merger and acquisition deals amounting to US$43.8 billion. The Gulf Cooperation Council (GCC) region accounted for the majority of deals – 254, valued at US$42.5 billion.

Compared with H1 2022, deal volume during this period was down by 14%, while actual deal values saw a slight increase of 0.4%. The M&A market in the first six months of the year was consistent with the trends observed in the second half of 2022.

While deals continued amongst the dampened global economic outlook, high interest rates, recession fears, inflationary environment and geopolitical tensions, deal-makers seemed to be adopting a cautious approach given the uncertain market conditions.

Sovereign wealth funds (SWFs), such as Abu Dhabi Investment Authority (ADIA) and Mubadala from the UAE and the Public Investment Fund (PIF) from Saudi Arabia, continued to lead the deal activity in the region to support their countries’ economic strategies.

Cross-border deals accounted for 57% and 85% of the total deal volume and value respectively, becoming more popular among growth-focused companies as more foreign investors wish to gravitate towards the region.

Outbound deals represented 32% of the total M&A deal volume and 70% of the value. Trade agreements such as the UAE CEPA agreement with India have spurred a flurry of deals as business investors wish to take advantage of respective markets, in some cases pooling resources.

Deals involving government-related entities (GREs) amounted to a total value of US$29.9 billion, accounting for 68% of the total disclosed deal value and 19% of the deal volume.

Transactions involving private equity (PE) or SWFs constituted around 23% and 53% of the total deal volume and value respectively.

In terms of sectors, technology was the lead player, contributing US$15 billion to the total deal volume, followed by chemicals with US$11.9 billion.

The UAE dominated the lists of target countries as well as bidder countries by value last year, followed by Saudi Arabia and Kuwait in both rankings. Egypt and Oman also made it among the top five bidder countries, while Bahrain and Qatar made an appearance among the top five target countries by value. Canada was the largest acquiring country outside the region by volume with transactions worth a total of US$2.6 billion, while France marked the highest number of inbound MENA deals with 13 in H1 2023.

Ten of the region’s largest M&As were concentrated in the UAE and Saudi Arabia.

In March 2023, US asset management firm Apollo Global Management and ADIA announced its plan to acquire UAE-based Univar Solutions for US$8.2 billion. That same month, Blackstone along with ADIA signed a definitive agreement to acquire the UAE’s Cvent Holding for US$4.7 billion.

In April 2023, PIF-owned Savvy Games Group announced its plan to acquire a 100% stake in the US mobile games developer Scopely, Inc. for US$4.9 billion.

Anil Menon, EY MENA Head of M&A and Equity Capital Markets Leader, said: “In line with historical trends, the technology sector witnessed the highest inbound and domestic deal activity in H1 2023.

“During this period, we saw a tremendous increase in deal value, contributed by two large deals. Investor interest focused mainly on cybersecurity, cloud computing, fintech and ecommerce, clearly indicating the segments that are poised to shape the future of the industry.”

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