Abu Dhabi: The MENA region witnessed 225 mergers and acquisitions (M and A) activity deals in Q1 2025, up from the 172 deals recorded in Q1 2024, reflecting a 31% increase in deal volume when compared year-on-year, according to the latest EY MENA M and A Insights 2024 report. Total deal value rose by 66% to US$46 billion in Q1 2025, when compared to US$27.6 billion in Q1 2024.
According to Emirates News Agency, the United Arab Emirates remained the top target country with 63 deals totaling US$20.3 billion in Q1-2025. Kuwait ranked second in terms of deal proceeds, reaching US$2.3 billion, driven by two major transactions in the diversified industrial products, and power and utilities sectors.
Cross-border deals were the primary driver of M and A activity in the MENA region, contributing 52% of total deal volume with 117 deals and 81% of total deal value at US$37.3 billion. Q1 2025 recorded the highest cross-border deal activity both in volume and value when compared to the same period in the past five years, as companies increasingly pursued growth and diversification beyond domestic markets.
Brad Watson, MENA EY-Parthenon Leader, noted a steady flow of M and A deals in 2024, with the MENA region continuing to exhibit a robust influx of M and A transactions in 2025. Regulatory reforms, policy shifts, and a favorable macroeconomic outlook, including easing interest rates and improved investor sentiment, supported this growth.
Domestic M and A activity saw a steady increase as well, contributing 48% of total deal volume in Q1 2025. This rise aligns with the International Monetary Fund (IMF) projection that MENA GDP will grow by 3.6% this year. Companies are realigning their strategies to accommodate the need for diversification, digital transformation, and the integration of emerging technologies.
During the first three months of 2025, Canada attracted the highest outbound deal value from MENA investors at US$6.4 billion, while the USA remained the preferred target destination in terms of deal volume. The technology sector led domestic M and A activity in MENA in Q1 2025, contributing 37% of total domestic deal value and 27% of total domestic deal volume.
Intraregional deals involving the UAE, Kuwait, and the Kingdom of Saudi Arabia accounted for 83% of total domestic deal value and 56% of total domestic deal volume, highlighting strong intraregional M and A activity, particularly in the technology, industrials, and real estate sectors. The MENA region continues to emerge as an attractive destination for foreign direct investment (FDI), with inbound deal volume surging by 21% and deal value reaching US$17.6 billion, compared to US$2.5 billion in Q1 2024.
The UAE remains the leading destination for FDI in the MENA region in Q1 2025, capturing 53% of total inbound deal volume and 99% of the total inbound deal value. Austria was the top investor country, driven by a major transaction in the chemicals sector. Outbound deal volume increased by 63% compared to Q1 2024, with a total deal value of US$19.7 billion. The UAE and KSA led outbound investment from the MENA region, accounting for 77% of total deal volume and 94% of total outbound value.
Though chemicals and oil and gas dominated outbound deal value, outbound deal volume primarily focused on technology, diversified industrial products, and professional services. Anil Menon, MENA EY-Parthenon Head of M and A and Equity Capital Markets Leader, expressed optimism for MENA deal markets, forecasting increased activity in consumer, technology, and energy sectors, with significant capital allocation in technology driven by AI.