Navigating Egypt’s M&A Downturn: Baker McKenzie Analysis 

Egypt’s merger and acquisition (M&A) landscape witnessed a significant decline in 2023 compared to the previous year, according to the latest report by global law firm Baker McKenzie. The report, based on LSEG data for globally announced M&A transactions, revealed a 53% decrease in overall deal volume and a 62% reduction in deal value in Egypt during the fiscal year 2023. 

Globally, the report noted a 6% decline in overall deal volume and a 16.4% reduction in deal value during the same period. The Middle East region experienced a modest downturn in M&A activity, with both deal volume and value decreasing by 4.7% and 2.2%, respectively, throughout the fiscal year 2023. 

Egypt’s deal-making activity in 2023 primarily focused on cross-border transactions, with 87 deals recorded for the year. Notably, Saudi Arabia emerged as the leading non-Egyptian outbound destination, securing 25 deals. 

Commenting on Egypt’s M&A landscape, Mohamed Ghannam, Managing Partner at Helmy, Hamza & Partners, Baker McKenzie Cairo (pictured), remarked, “Despite the global downturn in M&A activity, Egypt’s performance in the second half of 2023 suggests strategic growth and impactful deals taking place.” 

Throughout most months of the fiscal year 2023, overall deal activity in Egypt remained subdued. However, December stood out as the strongest month, witnessing 20 deals with a total value of USD 1.6 billion. 

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

Cross-border transactions, on the other hand, saw a decline in both deal volumes and values compared to fiscal year 2022. Transaction volume fell from 189 to 87, and values dropped by 80% to USD 1.6 billion. 

Hani Nassef, M&A Partner at Helmy, Hamza & Partners, Baker McKenzie Cairo, noted, “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.” 

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

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

For inbound investments in Egypt, the Financials industry emerged as the top target sector, with the United States leading as the primary non-Egypt acquirer. In terms of outbound M&A, Saudi Arabia stood out as the primary non-Egypt destination, particularly in the High Technology sector. 

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.”

Overall, while Egypt experienced a decline in M&A activity in 2023, strategic growth opportunities and resilient market dynamics indicate potential for recovery and future growth in the sector.