• In FY 2023, Egypt witnessed a 53% decline in overall deal volume and a 62% reduction in deal value
  • Globally, there was a 6% decline in overall deal volume and a 16.4% reduction in deal value during FY 2023
  • Modest downturn in Middle East M&A activity amidst recent geopolitical shifts and macroeconomic challenges in 2023
  • In the Middle East, both deal volume and value experienced a decrease of 4.7% and 2.2%, respectively, throughout FY 2023
  • Deal-making activity in Egypt prominently focused on cross-border transactions, amounting to 87 deals in FY 2023 
  • Saudi Arabia emerged as the leading non-Egyptian outbound destination, securing 25 deals for the year
According to the latest report by global law firm Baker McKenzie, based on LSEG data for globally announced M&A transactions, Egypt’s M&A in the second half of 2023 (H2 2023) experienced a 32% increase in deal volume to 79 deals compared to 60 deals in the first half of 2023 (H1 2023), while the total value surged by 383% to USD 2.8 billion compared to USD 597 million. For the full year 2023, both total volume and deal value declined by 53% (139 deals) and 62% (USD 3.48 billion), respectively. This trend was mirrored globally and in the Middle East, with deal values and volumes declining towards the end of the year.

Globally, M&A activity in FY 2023 decreased by 6% in terms of deal volume and by 16.4% in terms of deal value. The global overall M&A deal volume decline is attributed to the 6% drop in domestic deal volume and a 7% decline in cross-border deal volume.

In the Middle East, dealmaking during FY 2023 decreased by 4.7% in terms of deal volume and by 2.2% in terms of deal value. The decline in Middle East's overall M&A deal volume is attributed to the stagnant performance of domestic deal volume and a 7% decline in cross-border deal volume.

Commenting on Egypt’s M&A deals activity, Mohamed Ghannam, Managing Partner at Helmy, Hamza & Partners, Baker McKenzie Cairo said: “In the face of the global downturn in M&A activity, the Middle East's performance reflects a nuanced landscape, with a slight reduction in deal volume offset by a resilient average deal value. It is a testament to the adaptability of businesses and the evolving nature of M&A dynamics in this region."

"Further, despite the decline in Egypt's deal volumes over the full year, the significant growth in total value in the second half of 2023 suggests strategic growth and impactful deals taking place." 

Total M&A Deal Activity
Includes domestic and cross-border deals

Throughout most months of FY 2023, overall deal activity in Egypt remained subdued. However, December emerged as the strongest month, witnessing 20 deals. Value-wise, December outperformed all other months in the year, reaching USD 1.6 billion – an amount surpassing the monthly values recorded in 2022.

Domestic deal volume experienced a significant decline of nearly half (51%), totaling 52 deals for the full year compared to the previous year's 106 deals. Conversely, the full-year value increased by 48%, reaching USD 1.8 billion, compared to USD 1.2 billion in 2022. 

In contrast, cross-border transactions saw a decline in both deal volumes and values from FY 2022. Transaction volume fell from 189 to 87, and values dropped by 80% to USD 1.6 billion, down from USD 7.8 billion in FY 2022. 

Hani Nassef, M&A Partner at Helmy, Hamza & Partners, Baker McKenzie Cairo, further stated: “While the M&A landscape in Egypt faced notable challenges throughout 2023, the surge in total value in the second half of the year signals resilience and opportunities within the market.”

"Additionally, globally and in the Middle East, the fluctuations observed emphasize the dynamic nature of the M&A environment, with varying impacts on both domestic and cross-border transactions."

In the Middle East, the majority of deals for FY 2023 were cross-border in nature spurred by a strategic quest for diverse investment opportunities, access to new markets and the pursuit of synergies amidst a globally interconnected business landscape. 

Despite a slightly lower volume in FY 2023 compared to FY 2022, cross-border deals targeting the Middle East saw a modest improvement in terms of values. Deal values decreased by 7% with 604 deals, compared to 650 deals, amounting at USD 56.6 billion versus USD 52.8 billion in FY 2022. 

In terms of intraregional deals, volumes and values in FY 2023 decreased to 69 deals at USD 2.1 billion from 78 deals valued at USD 5.4 billion in FY 2022. Saudi Arabia emerged as the leading intra-regional acquirer in the Middle East (excluding Israel) during the year, securing 25 deals. It was closely followed by the United Arab Emirates with 23 deals and Bahrain with 8 deals. Additionally, the United Arab Emirates claimed the top position as the leading intra-regional target destination in the region, with 27 deals, followed by Saudi Arabia with 19 deals and Bahrain 4 deals.

In this regard, Karim Nassar from Baker McKenzie in Saudi Arabia, commented: "Saudi Arabia's prominence as the leading intra-regional acquirer underscores the strategic vision of businesses in the Kingdom. It reflects the Kingdom's commitment to regional collaboration and its position as a key player in driving inter-Middle East investments."

"These findings illuminates the resilience and adaptability of the Saudi market amongst evolving economic dynamics," he added.

Inbound Cross-Border M&A Deal Activity
Includes targets in Egypt and acquirers outside Egypt

The majority of cross-border deals in FY 2023 were inbound, comprising 69 deals valued at USD 1.4 billion, compared to only 18 outbound deals totaling USD 112 million.

Within the inbound investments, the Financials industry emerged as the top target sector, securing 18 deals. Following closely were Consumer Products and Services, Healthcare and High Technology, each with 7 deals.

In terms of value, the most substantial deals in FY 2023 were in the Consumer Staples sector, totaling USD 629 million. Notably, the acquisition of 30% stake (USD 669 million) in Eastern Co SAE by Global Investments Holding Ltd of United Arab Emirates stood out, representing the greatest deal. The transaction involved privately negotiated shares in the Giza-based cigarette manufacturer, a unit of the Egyptian state-owned Chemical Industries Holding Co, for EGP 19.281 billion (USD 625 million).

The United States led as the primary inbound, non-Egypt acquirer during the year, completing 14 deals. This was followed by Saudi Arabia with 7 deals and United Arab Emirates with 6 deals.

Outbound Cross-Border M&A Deal Activity 
Includes acquirers from Egypt and targets outside Egypt

Outbound M&A constituted 21% of Egypt's cross-border deals in FY 2023, comprising 18 transactions totaling  USD 112 million. 

Saudi Arabia occurred as the primary non-Egypt outbound destination for the year, with 25 deals, followed by United Arab Emirates with 9 deals and Kuwait with 6 deals.

In the realm of leading industries, the High Technology sector took precedence, hosting 8 deals amounting to USD 16 million in FY 2023. 
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