The Middle East and North Africa (Mena) region saw a significant surge in mergers and acquisitions during the first quarter of 2025, with both deal volume and value climbing substantially year-over-year, according to a new report from EY.
The increase was largely fuelled by a boom in cross-border transactions and a strong push for economic diversification across the region.
The EY Mena M&A Insights 2024 report revealed that the region recorded 225 M&A deals in Q1 2025, a 31 per cent jump from the 172 deals in the same period last year. The total value of these transactions surged by 66pc to $46 billion, up from $27.6bn in Q1 2024.
Cross-border deals were a primary catalyst, accounting for 52pc of the total deal volume (117 deals) and a commanding 81pc of the total deal value ($37.3bn). This marks the highest cross-border deal activity in both volume and value for a first quarter in the past five years, as companies in the region increasingly seek growth and diversification beyond their domestic markets.
EY-Parthenon Mena leader Brad Watson highlighted the ongoing momentum.
“In 2024 we saw a steady flow of M&A deals and the Mena region continues to exhibit a robust influx of M&A transactions in 2025,” he said. Mr Watson attributed this growth to “regulatory reforms, policy shifts, and a favourable macroeconomic outlook, including easing interest rates and improved investor sentiment.”
The report also noted a steady rise in domestic M&A activity, contributing 48pc of the total deal volume in Q1 2025. This aligns with the International Monetary Fund’s projection of 3.6pc GDP growth for the Mena region this year. Domestic deal volume increased by 20pc in Q1 2025, with deal value reaching $8.7bn, a significant jump from $1.69bn in Q1 2024.
The technology sector led domestic M&A, contributing 37pc of total domestic deal value and 27pc of total domestic deal volume. A notable transaction was Abu Dhabi-based AI and cloud computing firm Group 42’s agreement to acquire a 40pc stake in Khazna Data Centres for $2.2bn.
Intraregional deals involving the UAE, Kuwait, and Saudi Arabia accounted for 83pc of total domestic deal value and 56pc of total domestic deal volume, underscoring robust M&A activity within the region, particularly in technology, industrials, and real estate.
The UAE maintained its position as the top target country for M&A in the Mena region, with 63 deals totalling $20.3bn in Q1 2025. Kuwait ranked second in deal proceeds, reaching $2.3bn, driven by significant transactions in the diversified industrial products and power and utilities sectors.
The Mena region continues to attract foreign direct investment, with inbound deal volume rising by 21pc and deal value reaching $17.6bn in Q1 2025, compared to $2.5bn in Q1 2024.
The UAE was the leading destination for FDI, capturing 53pc of total inbound deal volume and 99pc of total inbound deal value. Austria emerged as the top investor country, primarily due to a major transaction in the chemicals sector.
Outbound M&A activity from Mena investors also surged, with deal volume increasing by 63pc year-on-year and a total deal value of $19.7bn, representing 43pc of overall deal value. The UAE and Saudi Arabia spearheaded these outbound investments, accounting for 77pc of total deal volume and 94pc of total outbound value.
While chemicals and oil and gas dominated outbound deal value, the volume of outbound deals was primarily focused on technology, diversified industrial products, and professional services, reflecting the region’s broader strategy to diversify into high-growth global sectors.
Canada attracted the highest outbound deal value from Mena investors at $6.4bn, while the USA remained the preferred target destination by deal volume. The UK was the leading destination for outbound M&A deals from Mena by volume, recording 13 transactions. A major transaction in Canada’s chemical sector, involving ADNOC and Austria’s OMV AG agreeing to acquire Canada’s Nova Chemicals for
$6.3bn, contributed significantly to outbound deal value.
EY-Parthenon Mena head of M&A and equity capital markets leader Anil Menon noted the resilience of Mena deal markets despite economic uncertainties.
“The Mena deal book for the remainder of 2025 is promising and we can expect to see increased activity in consumer, technology, and energy sectors,” he said.
Mr Menon also anticipates “significant capital allocation in technology” as AI is expected to drive material shifts in fundamental value.
avinash@gdnmedia.bh
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