• Middle East deal volumes and values for FY 2021 were significantly up by 51% and 58%, respectively, from FY 2020
  • US dominated inbound and outbound cross-border M&A as top acquirer and target country by volume and value for H2 2021 and FY 2021
  • Egypt 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
  • Worldwide deal making reached USD 5.9 trillion for the first time ever
  • By number of worldwide deals, volumes increased by 24% compared to 2020 levels

Following a strong first half year (H1 2021) of worldwide deal making, M&A activity continued to witness a robust growth momentum in the second half year (H2 2021) setting a record for global M&A activity in 2021 as the strongest annual period by deal value and an all-time high by the number of announced deals (since these numbers have been tracked), according to the latest report by global law firm Baker McKenzie*. Similarly, the same growth was witnessed in the Middle East with deal values and volumes further climbing up.

Globally, M&A activity for H2 2021 totaled USD 3.01 trillion, up by 27% from the previous half, and full year (FY 2021) totaled USD 5.9 trillion, up by 64% compared to year-ago levels and the strongest annual period for M&A since records began in 1980. By number of worldwide deals for H2 2021, total volume increased by 4% vs. H2 2020 with 29,482 deals, and for FY 2021, total volume climbed up by 24% compared to the previous year with over 63,000 deals announced during the year.

In the Middle East, deal making increased by 33% (y-o-y) in H2 2021 with 323 deals and total value soared by 248% (y-o-y) to USD 49.5 billion. FY 2021's performance blew last year's numbers with an increase in total volume and value by 51% with 665 deals and 58% to USD 89.8 billion, respectively.

July was the strongest month for H2 2021 with 58 deals and September was the top performing month value-wise with USD 8.7 billion.

Commenting on the Middle East’s M&A activity for 2021, 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.

Middle East M&A activity

Overall, the majority of deals in the region for H2 2021 were cross-border in nature spurred by the increased enthusiasm from investors to further speed up both large transformative deals as well as mid-market transactions.

Aggregate value of H2 2021 domestic deals increased by 99% to USD 8.2 billion vs. H2 2020, even though, for FY 2021, it decreased by 31% to USD 17.3 billion vs. FY 2020. The number of domestic deals in H2 2021 also increased by 68% vs. H2 2020 with 126 deals, while FY 2021 volume grew by 81% vs. FY 2020 with 241 deals.

As for cross-border M&A activity, H2 2021 volume has also picked up significantly during the period, up 17% against H2 2020 with 197 deals and FY 2021 volume up by 39% against FY 2020 with 424 deals. Value-wise, H2 2021 values tripled (308%) against H2 2020 with USD 41.4 billion and FY 2021 values sharply rose by 128% to USD 72.6 billion against FY 2020.

In terms of cross-regional deals, volumes and values in H2 2021 soared to 170 deals at USD 41 billion from 152 deals valued at around USD 10 billion in H2 2020. The same applied when comparing FY 2021 against FY 2020 with 361 deals vs. 277 deals worth USD 71.3 billion vs. USD 31.2 billion, respectively.

Inbound Cross-regional Middle East M&A

Despite slightly higher volumes and values in the first half of 2021 (H1 2021) compared to (H2 2021), cross-regional deals targeting the Middle East improved a tad in terms of both volumes and values in H2 2021 vs. H2 2020. Deal volumes increased by 20% with 59 deals vs. 49 deals. With respect to values, the improvement was evident with almost a quadruple (387%) jump amounting at USD 20 billion in H2 2021 vs USD 4.1 billion in H2 2020. Furthermore, FY 2021 total volume and value followed the same inclination with a 44% rise in volume and 94% rise in value.

In H2 2021, the United States remained the most active country in terms of cross-border deal making as it was the top acquirer country, both in terms of volume and value with 18 deals at USD 19 billion. The same applied on FY 2021 figures with 43 deals for USD 31.2 billion.

The High Technology sector was the most sought after industry for H2 2021 and FY 2021, volume-wise. It recorded a total of 17 deals in H2 2021 and 27 deals in 2021. This was likely due to investors passionately continuing to hunt for opportunities in this fast paced sector.

In this regard, Momany, added: “Technology and business are evolving in a very fast pace and legislators are constantly catching up with the new reality. Given the current situation in the region combined with investors’ interest in further tapping into the M&A industry, we will further notice expansions in tech-led deals especially during a post-pandemic period with technology proving to be the most crucial weapon in critical times. Other sought-after deals will continue to prosper in industries such as private equity, real estate, healthcare and lifesciences.”

Value-wise, Energy and Power top-ranked in H2 2021 as well as FY 2021 with deals amounting to USD 16 billion and USD 31.1 billion, respectively.

In FY 2021, the second most sought after industry based on number of deals was Financial Services with 26 deals whereas Consumer Products and Services was the second based on the value of deals, which amounted to USD 6.1 billion.

Outbound Cross-regional Middle East M&A

The value of outbound cross-regional deals from the Middle East doubled (200%) from USD 10 billion in FY 2020 to USD 30.4 billion in FY 2021. Deal volumes were also up by 23% in FY 2021, with a total of 224 outbound deals, compared to 182 outbound deals in FY 2020.

The United States was also the most targeted country both by volume and value with 29 deals at USD 11 billion in H2 2021 and 52 deals at USD 12.3 billion in FY 2021. Egypt ranked second to the US by number of deals in H2 2021 (19 deals) and FY 2021 (38 deals). By deal values, Indonesia (with USD 3 billion) and the United Kingdom (with USD 4.2 billion) ranked the second top targeted countries in H2 2021 and FY 2021 respectively.

High Technology recorded the most number of deals and highest total value for outbound cross-regional M&A in both H2 2021 and FY 2021 featuring important tech-focused transactions such as the recent proposed merger of Qatar’s Ooredoo Q.P.S.C. and Indonesia’s CK Hutchison Holdings Limited to create a prominent internet and digital company in Indonesia. A deal that is worth approximately USD 6 billion, on which HHP Law Firm (Hadiputranto, Hadinoto & Partners), a member firm of Baker McKenzie in Indonesia, advised CK Hutchison Holdings Limited ("CKHH Group") on. In FY 2021, it recorded a total of 45 outbound deals amounting to USD 6.5 billion, followed by the Energy and Power sector with a total of 29 deals valued at USD 5.4 billion and the Industrials sector with 28 deals also valued at USD 5.4 billion.

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