Middle East M&A activity scales 51% in 2021

The Middle East recorded strong M&A (mergers and acquisitions) activity with 665 deals in FY 2021, up 51 per cent from 439 witnessed in 2020, a new study has revealed.

Meanwhile, the region’s M&A deal value reached $89.8bn last year, surging 58 per cent from $56.7bn recorded during the previous year, according to a report from law firm Baker McKenzie.

For H2 2021, a total of 323 deals were recorded across the Middle East, up from 243 recorded in H2 2020.

The US took the lead, dominating inbound and outbound cross-border M&A as top acquirer and target country by volume and value for H2 2021 and FY 2021. Egypt, meanwhile, ranked as the second most popular target country by volume in outbound deals with 19 deals in H2 2021 and 38 deals in FY 2021, a statement said.

Omar Momany, partner and head of the corporate and M&A Practice Group at Habib Al Mulla & Partners, a member firm of Baker & McKenzie International, said: “We have seen a strong second half and a successful full year driving momentum across all markets in the Middle East with 2021 figures indicating that values and volumes are set to further uphold their sturdy momentum in 2022. This was driven by new deals in traditional sectors such as oil & gas as well as deals in emerging sectors including high technology, fintech, digital platforms, e-commerce, healthcare and education.”

“While the M&A market remains hard to predict, relatively speaking, the Middle East is one of the regions in the world that is set for dealmakers to continue to invest in the above mentioned futuristic sectors that are well positioned to succeed,” Momany added.

Globally, M&A activity for FY 2021 totaled $5.9tn, up 64 per cent compared to a year-earlier period. By number of worldwide deals for FY 2021, total volume climbed up by 24 per cent compared to the previous year with over 63,000 deals announced during 2021.

Middle East M&A activity
Overall, the majority of deals in the Middle East region for H2 2021 were cross-border in nature with aggregate value of H2 2021 domestic deals increasing by 99 per cent to $8.2bn versus H2 2020. For FY 2021, it decreased by 31 per cent to $17.3bn vs. FY 2020.

As for cross-border M&A activity, H2 2021 volume went up 17 per cent against H2 2020 with 197 deals and FY 2021 volume up by 39 per cent against FY 2020 with 424 deals. Value-wise, H2 2021 tripled (308 per cent) against H2 2020 with $41.4bn and FY 2021 values rose by 128 per cent to $72.6bn against FY 2020.

Inbound cross-regional Middle East M&A
Cross-regional deals targeting the Middle East improved terms of both volumes and values in H2 2021 versus H2 2020. Deal volumes increased by 20 per cent with 59 deals versus 49 deals. Value-wise, it soared 387 per cent from $4.1bn in H2 2020 to $20bn in H2 2021. For FY 2021, total volume and value rose 44 per cent and 94 per cent respectively.

The high technology sector was the most sought after industry for H2 2021 (17 deals) and FY 2021 (27 deals). Value-wise, energy and power top-ranked in H2 2021 as well as FY 2021 with deals amounting to $16bn and $31.1bn, respectively. Financial services was the second best performing industry in FY 2021, with 26 deals whereas consumer products and services was the second based on the value of deals.

Outbound cross-regional Middle East M&A
The value of outbound cross-regional deals from the Middle East doubled from $10bn in FY 2020 to $30.4bn in FY 2021. Deal volumes were also up by 23 per cent in FY 2021, with a total of 224 outbound deals, compared to 182 outbound deals in FY 2020.

The US was also the most targeted country both by volume and value with 29 deals at $11bn in H2 2021 and 52 deals at $12.3bn in FY 2021. Egypt ranked second by number of deals in H2 2021 (19 deals) and FY 2021 (38 deals).