UAE, Saudi Arabia drive $59b merger surge in Middle East

19/08/2025 03:51 AST

The Middle East and North Africa's mergers and acquisitions (M&A) landscape showed remarkable momentum in the first half of 2025, with the UAE and Saudi Arabia continuing to lead the region's deal value.

According to the latest EY Mena M&A Insights report, a total of 425 deals worth $58.7 billion were recorded in H1 2025, marking a 31 per cent increase in volume and a 19 per cent rise in value compared with the same period last year.

The UAE and Saudi Arabia together attracted $27.9 billion in investments, reinforcing their status as the twin anchors of the region's deal-making ecosystem. The UAE accounted for $25.4 billion of this figure, underscoring its position as the top destination for international investors, while Saudi Arabia drew $2.5 billion, reflecting its growing role in diversifying beyond oil and into sectors such as chemicals, technology, industrials, and real estate. The combined contribution of these two Gulf economies amounted to nearly half of all deal value in the region, demonstrating their pivotal role in shaping the MENA investment landscape.

The period was characterised by an unprecedented surge in cross-border transactions, which climbed to a five-year high. Cross-border deals accounted for 233 out of the 425 total transactions, with a combined value of $45.9 billion.

This represented 55 per cent of total deal volume and 78 per cent of overall value. Chemicals and technology were the standout sectors, together contributing 67 per cent of cross-border deal value. The largest deal was the $16.5 billion acquisition of a 64 per cent stake in Borouge by Borealis AG and OMV AG, underscoring the appeal of the UAE's industrial and chemicals sector to international capital.

Analysts point out that this surge in activity reflects the region's resilience and adaptability amid global headwinds. "The positive performance in the first half of 2025 underscores the strength, dynamism, and resilience of Mena's M&A market," said Brad Watson, Mena EY-Parthenon leader. "We are witnessing record-breaking cross-border activity as investors look beyond short-term volatility, actively pursuing scale, innovation, and new market opportunities. The UAE, in particular, remains a magnet for global capital, supported by a stable regulatory framework and a focus on economic diversification, while regional partnerships with Europe, Asia, and North America are opening doors to fresh growth channels."

Domestic and inbound M&A also saw strong gains. Domestic deals accounted for 192 transactions worth $12.8 billion, representing 45 per cent of total volume and 22 per cent of total value, nearly doubling year-on-year. Diversified industrial products and technology were the primary drivers. The largest domestic deal was Abu Dhabi-based Group 42's $2.2 billion purchase of a 40 per cent stake in Khazna Data Center, highlighting continued investor appetite in the digital infrastructure sector.

Inbound activity rose sharply, with 107 deals worth $21.5 billion, an increase of 53 per cent in volume and more than threefold in value from $6.4 billion in H1 2024. The UAE was again the standout performer, accounting for 50 per cent of inbound deal volume and an overwhelming 98 per cent of inbound value. Austria emerged as the leading investor, contributing 77 per cent of inbound deal value, driven largely by the Borouge chemicals sector transaction.

Outbound deal-making also grew steadily, with 126 transactions valued at $24.4 billion, up 30 per cent in volume from the previous year. The UAE and Saudi Arabia were central players, together accounting for 87 per cent of outbound value. Prominent deals included Adnoc and OMV AG's acquisition of Canada's Nova Chemicals and Saudi Aramco's $3.5 billion purchase of Primax in South America, illustrating how Gulf energy and industrial champions are extending their global footprint.

A key feature of the first half was the significant role of sovereign wealth funds and government-related entities, which contributed $21 billion across 54 deals. Entities such as the Abu Dhabi Investment Authority (Adia), Public Investment Fund (PIF), and Mubadala were highly active, focusing on chemicals, technology, and industrial sectors that align with long-term national diversification agendas.

Anil Menon, Mena EY-Parthenon head of M&A and Equity Capital Markets leader, noted that the region's fundamentals remain highly attractive for investors. "Mena's deal-making continues to thrive in 2025, reflecting investor confidence in the region's long-term fundamentals. Stable oil prices, ongoing infrastructure development, and a strategic focus on technology, chemicals, and industrials are creating solid foundations for sustained activity."

Khaleej Times