UAE Leads the Most Attractive Countries in the Region for M&A Deals

Despite an increase in the number of agreements, the value of mergers and acquisitions in the Middle East and North Africa fell to $55.2 billion over the first three quarters of 2022 as economic uncertainty dampened activity.
EY, a London-based firm, reported that despite a slight 6% increase in agreements from a year ago to 524, the value of activity fell by 23% year over year as rising inflationary pressures, weakening demand, and global market disruptions weighed on the sector.
According to the recent EY survey, Egypt came in second with 99 agreements worth $3.9 billion, and the UAE continued to be the leading market for M&A activity with 155 deals worth $17.2 billion completed through the first nine months of 2022.
Saudi Arabia, the largest economy in the Arab world, completed 58 deals totaling $3.4 billion. The top two were Oman with 10 deals worth $700 million and Morocco with 22 deals totaling $1.9 billion.
However, the MENA countries’ economic and technological initiatives have helped the region stay a desirable market for M&A activity despite the declining value and difficult economic environment.
Due to anticipated economic growth brought on by increasing oil prices and a speeding up of business-friendly changes, the MENA region continues to experience increased M&A activity. A significant number of deals are being driven by technology, which reflects the region’s rapidly increasing digital transformation across all industries.
Businesses all over the region are constantly thinking about and engaging in M&As as they look to enter or access new markets, which will strengthen their customer bases and provide them with additional revenue streams to improve their bottom lines.
According to the above-mentionde report, domestic M&A activity decreased by 3% in the first nine months of 2022 on 268 agreements, with a total value that fell by 48% to $18 billion from $34.6 billion a year earlier.
During the nine-month period, significant transactions included Ghitha Holding’s $2.4 billion purchase of Tamween Management, Emaar Properties’ $2.042 billion purchase of Dubai Creek Harbour, Q Holding’s $1.6 billion purchase of Reem Investments, and a $1.5 billion investment by Saudi Arabia’s Public Investment Fund in Kingdom Holding Company for a 16.8% stake.
One of the biggest transactions in Abu Dhabi saw Alpha Dhabi Holding buying a 17% share in Aldar Properties for $1.452 billion. International Holding Company, an Abu Dhabi-listed conglomerate whose subsidiary is Alpha Dhabi, later expanded its shareholding to gain control of the property developer.
Meanwhile, inbound agreements into MENA increased to 119 in the first nine months of the year, up from 105 a year earlier, thanks to reforms that were beneficial to business, higher oil prices, and the relaxation of travel restrictions.
With 62 transactions totaling $7.4 billion in the period, the UAE continued to be the preferred investment location. In accordance with the government’s goal for a digital-first economy, the technology sector was the most active, with 37 technology agreements in MENA, 23 of which flowed into the UAE.
Higher crude oil prices, combined with favourable regional government initiatives in attracting investments to the region and MENA investors looking for futuristic investment opportunities in foreign markets will be the major drivers of M&A activity in the region going forward.
In the first nine months of 2022, outbound activity increased, with the value more than tripling to $27.2 billion on 137 deals from $11.9 billion on 113 deals a year earlier.
The UAE once more recorded the highest number of outbound transactions, with telecom provider eacquisition &’s of a 9.8% share in the UK’s Vodafone Group in a deal worth $4.4 billion being the largest.
In the first nine months of 2022, 155 offers worth $17.2 billion were registered in the UAE, Egypt had 99 offers worth $3.9 billion, Saudi Arabia had 58 offers worth $3.4 billion, Morocco had 22 offers worth $1.9 billion, and the Sultanate of Oman had 10 offers. The UAE continued to lead the list of the five countries most attractive to deals in the Middle East and North Africa.
Due to persistent inflationary pressures, the economic slump, and market volatility, the number of merger and acquisition offers increased sporadically by 6% from year to year, while the total value of deals fell by 23% from the same time period in 2016.
In addition, the report showed that local merger and acquisition offers had been the most widely publicized, accounting for 51% of all offers while accounting for 33% of all introduced offers in the region during the first nine months of 2022.
Although there is financial instability around the world, the Middle East and North Africa region has continued to report increased activity in merger and acquisition offers due to anticipated financial growth driven by higher costs, according to Brad Watson, Head of Transactions and Technique for the Middle East and North Africa Area at Ernst. Oil, as well as the quickening of changes in support of business. In addition, the IT sector is experiencing an increase in deals, which reflects the speeding up of projects for digital transformation in many local companies.
Transportation, real estate, consumer goods, technology, banking, and capital markets are the top 5 sub-sectors in the MENA region by the value of introduced offers. Anil Menon, Head of Mergers & Acquisitions Advisory Services and Capital Markets for the Middle East and North Africa at EY, said “What’s interesting about these most recent results is the rise in M&A activity, not only from traditional markets like the UAE and Saudi Arabia, but also in other countries in the region. Area of the Middle East and North Africa, including Egypt, Morocco, Qatar, and Oman; the main factor driving the expansion of mergers and acquisitions activity in the region sooner rather than later is the rise in crude oil prices, along with government initiatives to attract investments to the region and the pursuit of buyers within the Middle East and North Africa region for future investment opportunities in foreign markets”.
Greater inbound transaction volume in the MENA region has been observed this year, with 119 deals compared to 105 deals during the same period last year, as a result of rising oil prices and a relaxation of travel restrictions. The 62 deals worth $7.4 billion that took place in the UAE show that it is still a top choice for investors.
These deals were made possible by reforms that have been made to improve the business climate, draw foreign investment, and encourage companies to establish or expand their operations. The biggest deal volume was in the technology sector, and 23 of the 37 technology deals were going into the UAE, demonstrating the desire of the regional administration for digital transformation.