The volume of merger and acquisition deals in the Middle East and North Africa surged 66 per cent last year as the region's economies charted a strong recovery from the coronavirus pandemic.
There were 661 transactions worth $99 billion last year, compared with 397 deals worth $85.2bn in 2020, according to Ernst & Young (EY).
The UAE experienced the highest deal activity in terms of volume with 303 transactions, while Saudi Arabia attracted the most M&A capital, worth $47.4bn, the consultancy said in a report. Egypt, the Arab world's third-largest economy, also saw robust deal activity in 2021 with 118 deals worth $7.7bn.
In 2021, we saw a tremendous surge in Mena M&A activity as a result of improving post-Covid-19 market conditions
Brad Watson,
EY Mena strategy and transactions leader
“In 2021, we saw a tremendous surge in Mena M&A activity as a result of improving post-Covid-19 market conditions,” said Brad Watson, EY Mena strategy and transactions leader.
“The recovery in oil and gas prices and an improving public health backdrop have also helped to lift the economic outlook in the region, leading to renewed confidence in regional boardrooms.”
Gulf economies grew 2.3 per cent in 2021 on the back of higher oil prices and fiscal stimulus measures, following a 4.9 per cent contraction the previous year when the pandemic began, Dubai’s biggest bank by assets, Emirates NBD, said in a recent report. The countries are forecast to grow 5.1 per cent on average this year.
The structural reforms carried out over the last two years, along with a much stronger fiscal position and recovering domestic demand, will support growth across Gulf countries this year and beyond, the lender said.
Domestic (intraregional) deals accounted for 55 per cent of M&A volumes in the Mena region last year, EY said. These deals increased to 366 in 2021 from 192 deals the previous year.
Meanwhile, the top 10 deals by value in 2021 cumulatively amounted to $58.8bn, accounting for 59 per cent of total deal value.
Government-related entities (GRE), including sovereign wealth funds and national oil companies, contributed to a total deal value of $62.6bn and accounted for 63 per cent of total disclosed M&A value in Mena last year, according to EY.
“Mena M&A activity in 2021 was unprecedented not just by sheer volume, but also because much of the deal-making was conducted virtually,” Anil Menon, head of Mena M&A and equity capital markets at EY, said.
“Furthermore, what makes 2021 remarkable is that the activity levels have been consistently good across sectors and geographies. We expect continued confidence and momentum in 2022.”
Private equity companies executed 165 Mena M&A deals in 2021 compared with 73 in 2020.
What makes 2021 remarkable is that the activity levels have been consistently good across sectors and geographies
Anil Menon,
head of Mena M&A and ECM at EY
Some of the major M&A deals included Saudi Arabian food group Savola's acquisition of nuts company Bayara Holding for $260 million, as well as several deals by Abu Dhabi-based food and beverages company Agthia in confectionery and poultry, EY said.
The region registered significant M&A activity within the energy, resources and chemicals sectors in 2021, with several multi-billion dollar deals signed in Saudi Arabia.
The oil and gas sector witnessed the highest deal activity in terms of deal values, largely driven by a stake sale by Aramco in its natural gas pipeline business. In April 2021, a consortium led by EIG Global Energy Partners acquired a 49 per cent stake in Aramco Oil Pipelines Company for $12.4bn.
BlackRock and Hassana Investment signed a lease and leaseback deal with Saudi Aramco in December 2021 to acquire its gas pipeline network for $15.5bn.
The technology sector witnessed the highest deal activity in terms of deal volumes in 2021, according to EY.
Out of 43 inbound technology deals in the region, 20 were in the UAE.
“Looking ahead, Mena M&A activity in 2022 is expected to remain robust. Key deal themes include continued GRE investment, digitalisation and technology, and portfolio optimisation,” EY said.
About 64 per cent of Mena chief executives surveyed recently indicated that their companies would be pursuing M&A in the year ahead, an EY 2022 CEO Outlook Survey, which polled the views of more than 2,000 chief executives across the globe, said. Above-average M&A activity is likely to continue in 2022, the poll found.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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Bert van Marwijk factfile
Born: May 19 1952
Place of birth: Deventer, Netherlands
Playing position: Midfielder
Teams managed:
1998-2000 Fortuna Sittard
2000-2004 Feyenoord
2004-2006 Borussia Dortmund
2007-2008 Feyenoord
2008-2012 Netherlands
2013-2014 Hamburg
2015-2017 Saudi Arabia
2018 Australia
Major honours (manager):
2001/02 Uefa Cup, Feyenoord
2007/08 KNVB Cup, Feyenoord
World Cup runner-up, Netherlands
Company%20profile
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Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
Company Profile
Company name: Yeepeey
Started: Soft launch in November, 2020
Founders: Sagar Chandiramani, Jatin Sharma and Monish Chandiramani
Based: Dubai
Industry: E-grocery
Initial investment: $150,000
Future plan: Raise $1.5m and enter Saudi Arabia next year
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
