meed-logo

line1 line2 line3
SIGN IN / REGISTER

Acquisition with a view to transition

24 October 2024

 

Adnoc International’s $16.3bn bid for German plastics group Covestro, signed on 1 October, has called fresh attention to the Middle East and North Africa (Mena) region as a source of merger and acquisition (M&A) activity.

The deal by the UAE state energy company’s overseas business arm, which is the largest Mena deal of the year, is just one of a string of acquisitions by regional energy companies seeking to diversify both sectorally and in terms of geography. And energy – notably the low-carbon variant – has emerged as a key focus for buyers.

Within the Mena region, the GCC remains the mainstay of deal flow, with its clutch of sovereign wealth funds (SWFs) and government-related entities (GREs) underpinning activity through transformative agendas that are shaped by government-led ambitions to shift away from oil and gas and embrace newer areas of the economy.

The figures underscore the Gulf bias in M&A deal flow. Ten of the Mena region’s highest-valued M&As in the first six months of 2024 were concentrated in the GCC region. 

The UAE and Saudi Arabia saw a combined 152 deals worth $9.8bn and were among the top Mena bidder countries in terms of deal volume and value, according to data from EY.

The largest transaction came in February, when private equity firms including Clayton Dubilier & Rice, Stone Point Capital and Mubadala Investment announced the acquisition of Truist Insurance Holdings, the US’s fifth-largest insurance brokerage, for $12.4bn – a sign that Gulf entities have the appetite and balance sheet to lock down opportunities in North America. 

Indeed, according to EY, the US remained the preferred target destination for Mena outbound investors in the first half of 2024, with 19 deals amounting to $16.6bn.

Meanwhile, Gulf-based SWFs dominate in regional M&A activity in terms of deal value. Consultancy Bain & Company says they represented 86% of deal value in 2023, either directly or through portfolio companies.

Industrial focus

Sector-specific drivers have come to the fore for some participants, and that is evident in the spread of M&A activity. Take Saudi Arabia’s Public Investment Fund (PIF), which acquired steel companies Al-Rajhi Steel and Hadeed last year, from Rajhi Invest and Saudi Basic Industries Corporation, respectively, creating a national champion in a domestic steel sector that has consolidated.

Similarly, Adnoc’s Covestro acquisition confirms the prominent role that national oil companies continue to play as they morph into energy companies with more diverse product slates, and in turn are required to grow inorganically at times. 

The Covestro deal represents a similar move to the PIF’s steel sector play last year. The German company would become a key plank in Adnoc’s ambition to create a speciality chemicals business. In a similar way, Borealis, in which Adnoc is a minority stakeholder, acquired Austrian chemicals group Integra Plastics in a deal announced in April 2024.

“The acquisitions from Adnoc are in line with a vision that they set out [in 2017], when the company restructured and broadened its scope to be a global business, looking actively for global opportunities to grow and diversify,” says Alice Gower, a partner at Azure Strategy.

She says that the interest in the European downstream sector is “a really smart move, because it not only ensures a market for their products, but it replaces Russian supplies and creates a dependency between Europe and, in this case, the Saudis or Emiratis”.

UAE companies’ interest in buying into European industrial firms has been evident this year. February saw Adnoc complete its long-running effort to acquire a 24.9% stake in Austrian petrochemicals firm OMV, and in May, state held Emirates Global Aluminium completed the acquisition of German aluminium recycling firm Leichtmetall Aluminium Giesserei Hannover. 

Another geographic theme has seen GCC firms target Asia and Africa – the latter increasingly a focus in terms of its resource opportunity, as well as its capacity to provide a growing consumer market with an emergent middle class.

Last year, Asia figured in some of the biggest deals involving Mena companies, such as the $2bn investment by the UAE’s Mubadala in Chinese fashion retail firm Shein, and Qatar Investment Authority’s purchase of a $1bn stake in India’s Reliance Retail Ventures.

Resources – particularly transition minerals – look set to remain a prominent theme for Mena dealmakers. In Africa, the UAE’s International Resource Holding, an affiliate of Sheikh Tahnoon Bin Zayed-headed International Holding Company, completed its acquisition of Zambia’s Mopani Copper Mine in March 2023, paying $1.1bn for a 51% stake. The UAE firm has moved into critical metals and sees this entity as playing a key role in developing the metal and mining supply chain.

Energy transition

The energy transition will continue to push Gulf acquirers’ M&A agendas. 

Abu Dhabi’s Masdar, eyeing a target 100GW of clean energy by 2030, has become an active M&A player. In June, it acquired a 67% stake in Greek company Terna Energy for $2.9bn. 

Deal flow at Masdar has been brisk, with a deal struck in September to acquire renewable energy provider Saeta Yield from US investment firm Brookfield for $1.4bn, handing it significant power assets in Spain and Portugal and a 1.6GW development pipeline. 

Masdar has also been growing its US foothold, closing a deal in October for a 50% stake in US renewables company Terra-Gen, which boasts a wind, solar and battery storage portfolio of 3.8GW.

Meanwhile, with the PIF and Mubadala both committed to net-zero targets by 2050, in addition to working to decarbonise their existing portfolios, the funds are investing in green assets and in technologies that support decarbonisation, notes Bain & Company. 

Azure Strategy’s Gower cautions against reading too much into the professed diversification agenda, however. 

“Everybody talks about diversification, but if you actually look at what they’re investing in, it’s not that far from the fossil fuel industry,” she says. 

“There is a vertical integration logic: you’re upstream and you want to then become more involved in midstream and downstream – that makes sense. But the businesses that they are buying are pretty low-margin, so there has to
be a different reason behind this approach.”

Instead, defensive motivations are in play. “It is about capturing shares in assets across different markets in order to spread risk, and then diversifying revenue streams away from direct exports, given their geographic location,” she says. 

“Look at what is going on in the region at the moment, and the increase in shipping costs, the instability and insecurity risk.”

Banking mergers

M&A in the Mena banking sector has slowed down in the past five years, following a spate of deals that mainly reflected the reordering of state holdings in large Gulf banks.

In March 2024, the Egyptian subsidiary of Bahrain’s Bank ABC completed its merger with the Egyptian subsidiary of Lebanon’s Blom Bank, tripling Bank ABC’s market share in Egypt.

Market speculation is now centring on consolidation within Kuwait’s banking sector.

The proposed merger of Boubyan Bank and Gulf Bank – Kuwait’s third- and fifth-largest lenders – would create an Islamic lender with assets of about $53bn.

“GCC banks in general have been keeping their options open because these are small, concentrated economies and markets, and therefore international expansion will help diversify business models and improve profitability,” says Redmond Ramsdale, senior director for banks at Fitch Ratings.

M&A moves have taken Gulf banks into the wider region. 

“External growth is part of some GCC banks’ strategy to diversify business models and improve profitability,” says Ramsdale. “By deploying capital into high-growth markets, they may be able to compensate for weaker growth in their home markets.”

In the wider Mena region, M&A activity in 2025 will be driven by the big regional SWFs and GREs. The need to decarbonise their portfolios will shape inorganic growth strategies as they look to buy lower-carbon assets ‘off the shelf’ to meet net-zero and emission-reduction targets.

With sizeable acquisition budgets at their disposal, these players do not lack the financial firepower to target assets that will help them meet their goals.

https://image.digitalinsightresearch.in/uploads/NewsArticle/12744105/main.gif
James Gavin

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • PDO allows more time for Al-Ghubar field project prices

    17 August 2026

     

    Petroleum Development Oman (PDO) has allowed contractors additional time to prepare commercial bids for a project to build a new facility to handle additional oil production from the Al-Ghubar field in the sultanate.

    The Al-Ghubar field is located in the Ghaba Salt Basin at Qarn Alam, within majority state-owned PDO’s Block 6 concession area.

    The Al-Ghubar gas-oil gravity drainage (GOGD) facility will be designed as a sour (hydrogen sulphide) facility and is expected to handle maximum oil production of 1,800 standard cubic metres a day (cm/d), a maximum total water flow rate of 10,421 standard cm/d, and maximum gas lift of 256,934 standard cm/d. Production from the planned Al-Ghubar GOGD facility will be exported to PDO’s main oil line.

    Following receipt of the technical bids for the project in July, PDO granted contractors additional time – until 16 August – to submit commercial bids for the project, MEED recently reported.

    The project operator has now extended the deadline for submitting commercial bids to 1 September, sources told MEED.

    PDO floated the tender for the Al-Ghubar GOGD facility project in March, setting an initial bid submission deadline of 4 May, MEED previously reported.

    PDO later extended the deadlines for submission of technical and commercial bids to 26 July and 7 August, respectively. Contractors submitted technical proposals by the revised deadline, according to sources.

    The following contractors, among others, are understood to be bidding for the project:

    • Archirodon (Greece)
    • Engineering for the Petroleum & Process Industries (Egypt) / Petrojet (Egypt)
    • Jereh (China)
    • Kent (UAE)
    • Larsen & Toubro Energy Hydrocarbon (India)

    The scope of work on the Al-Ghubar GOGD facility project covers the engineering, procurement and construction (EPC) of the following:

    • On-plot scope consists of:
      • Production separator  
      • Test separator  
      • Concentric wash tank
      • Wet oil pump
      • Water bath heater
      • Surge tank
      • Gas injection/gas lift compressor (centrifugal)
      • Utilities (Instrument Air compressors, chemical injection skids, drain system, vent system) 
      • Suction scrubber
      • Air coolers
      • Discharge scrubbers
      • Condensate flash drum
      • Atmospheric pressure knock-out drum 
      • Flare system
      • Gas heater
      • Water disposal pump
      • Oil shipping pump
      • New 132kV substation and plant substation (housing 6.6kV & 415-Volt switchboard)
      • New control room
         
    • Off-plot scope consists of:
      • Off-plot pipeline network (bulk header, test header, gathering infrastructure/ gathering line header, instrument air header, water disposal header)
      • Two remote manifold stations 
      • Tie-in connection to main oil line
      • Tie-in to gas network pipeline

    PDO previously intended to tender the Al-Ghubar GOGD project under its framework structure with selected EPC contractors, but eventually tendered it separately.

    PDO is the operator of the Block 6 hydrocarbons concession in Oman, which is the sultanate’s largest and most prolific concession. Situated onshore and covering an area of 75,119 square kilometres, Block 6 contains 202 oil fields and 43 gas fields, with PDO producing a total of approximately 680,000 barrels a day (b/d) of oil and condensates from those fields.

    The Omani government holds a 60% stake in PDO through Energy Development Oman (EDO). The other shareholders are UK-based Shell (34%), France’s TotalEnergies (4%) and Thailand’s state-owned PTTEP (2%).

    ALSO READ: PDO floats tender for major flare gas monetisation scheme
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18799485/main.jpg
    Indrajit Sen
  • L’imad eyes full takeover of AD Ports Group

    17 August 2026

    Abu Dhabi’s sovereign investor, L’imad Holding, has announced its intention to take full ownership of AD Ports Group by offering to acquire the remaining 24.6% of its publicly listed shares through a voluntary, conditional, all-cash tender offer.

    The bid will be launched via L’imad’s wholly owned unit, Abu Dhabi Developmental Holding Company (ADQ), which already controls 75.42% of AD Ports Group. The offer seeks to acquire 100% of the issued and paid-up share capital and take the port operator private.

    Shareholders would be offered AED6.25 per share in cash. L’imad said the offer provides investors with “an attractive opportunity to realise certain and immediate value”.

    Based on the proposed terms, the transaction values the remaining free float at about AED31.8bn ($8.66bn).

    Rothschild & Co’s local office has been appointed financial adviser.

    Emirates NBD Bank and First Abu Dhabi Bank will act as joint lead receiving banks, while Emirates NBD Capital and First Abu Dhabi Bank will serve as joint lead managers.

    Cairo-headquartered EFG Hermes has been appointed co-lead manager, and UK-based Allen Overy Shearman Sterling is acting as legal adviser.

    The move comes shortly after AD Ports Group posted its strongest quarterly performance to date, reporting an 88% increase in second-quarter net profit to AED836m ($227m).

    Revenue for the second quarter of this year rose 47% to $2bn, supported by gains across maritime and shipping, economic cities and free zones, and logistics.

    In January, Abu Dhabi approved plans to consolidate ADQ’s investment portfolio into L’imad Holding under the chairmanship of Abu Dhabi Crown Prince Sheikh Khaled Bin Mohamed Bin Zayed Al-Nahyan.

    L’imad has been mandated to build, develop and manage a diversified portfolio of assets and projects in priority sectors in the UAE and internationally, with a focus on infrastructure and real estate, financial services, and asset and investment management.

    Once fully consolidated, the platform will encompass more than 25 investment companies and platforms, alongside over 250 subsidiaries.

    L’imad’s portfolio includes Taqa (utilities and power), Modon Properties (real estate), Etihad Airways (aviation), PureHealth (healthcare), Etihad Rail (transport infrastructure), Wio Bank (digital finance), AD Ports (logistics and maritime trade), McLaren (motorsport) and Louis Dreyfus (agricultural commodities).

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18798489/main.jpg
    Yasir Iqbal
  • Saudi firms to build Expo 2030 power infrastructure

    17 August 2026

    Saudi Energy, formerly Saudi Electricity Company, has named four contractors that will deliver electricity infrastructure for the Expo 2030 Riyadh site.

    The local Al-Babtain, Haif Company, Alfanar and Trading & Development Partnership (TDP) will construct several substations and connect them to the national grid under an agreement signed between Saudi Energy and Expo 2030 Riyadh Company (ERC).

    Saudi Electricity Projects Development Company (PDC), Saudi Energy’s project development arm, will oversee implementation.

    The scope includes a main 380/132kV supply station and three primary 132/13.8kV substations as well as associated electricity infrastructure.

    In March, MEED reported that Saudi Energy was moving forward with procurement of an engineering, procurement and construction (EPC) contract for three 132/13.8kV substations in Riyadh to support Expo 2030.

    The latest agreement is understood to relate to the same substations. According to sources, nine companies submitted bids for the project in June.

    These included the following local firms: Al-Babtain Contracting, Al-Gihaz Holding, Al-Haider Company, Alfanar Projects, Haif Company, Mohammed Al-Ojaimi Group, Nesma Infrastructure & Technology and Tareg Al-Jaafari Contracting Establishment.

    India’s Larsen & Toubro also submitted a bid for the project.

    The infrastructure will provide electricity to the Expo site ahead of the event and allow testing and trial operations to be completed before the Expo opens.

    In January, the local firm Nesma & Partners won an estimated SR1bn ($267m) contract to deliver the initial infrastructure works at the Expo site.

    Expo 2030 Riyadh is scheduled to take place from 1 October 2030 to 31 March 2031. The event is expected to attract about 42 million visits and will involve 197 participating countries.

    READ THE AUGUST 2026 MEED BUSINESS REVIEW – click here to view PDF

    Saudi Arabia builds for the global stage; Rising uncertainty creates fresh set of challenges in the Maghreb; Gulf banks remain robust in the face of geopolitical tensions.

    Distributed to senior decision-makers in the region and around the world, the August 2026 edition of MEED Business Review includes:

    > MARKET FOCUS: Maghreb fortunes diverge
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/18798653/main.jpg
    Mark Dowdall
  • Design contract awarded for Algerian gas project

    17 August 2026

     

    Indonesia’s Synergy Engineering has been provisionally awarded a design contract for a planned gas project in Algeria.

    The front-end engineering and design (feed) contract was awarded by Pertamina Algeria Eksplorasi Produksi (PAEP), which is a subsidiary of Indonesia’s state-owned energy company.

    The contract was awarded by PAEP in association with Algeria’s national oil and gas company Sonatrach and Spain’s Repsol.

    Sonatrach, Pertamina and Repsol are partners in Block 405a of the Menzel Ledjmet Nord (MLN) field.

    The feed contract covers developing a liquefied petroleum gas (LPG) plant and a water injection facility at the MLN field as part of the field’s fifth development phase.

    Block 405a is situated onshore in the Illizi-Ghadames Basin in eastern Algeria. It comprises eight oil and gas fields split over three onstream development areas.

    Algeria is home to Africa’s second-largest proven natural gas reserves after Nigeria. It is also Africa’s largest natural gas producer.

    Amid ongoing issues exporting oil and gas from the GCC due to disruptions to shipping through the Strait of Hormuz, Algeria is seeking to increase its oil and gas exports to meet European demand.

    In July, Algerian President Abdelmadjid Tebboune oversaw the signing of dozens of bilateral agreements as part of a wider push to bolster political and economic ties between Germany and Algeria.

    The agreements included several focused on oil, gas and energy.

    On 2 July, Sonatrach delivered its first shipment of liquefied natural gas (LNG) directly to Germany’s Wilhelmshaven 1 floating LNG import terminal.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18756842/main.jpg
    Wil Crisp
  • Contractors win construction packages for Egypt’s Ras El-Hekma

    17 August 2026

    Egypt’s Rowad Modern Engineering has announced that it has won new contracts to undertake construction works on two packages at the Ras El-Hekma master development on Egypt’s Mediterranean coast.

    Ras El-Hekma’s master developer, Modon Holding, awarded the contracts.

    The first contract covers construction works for Area 2 of the Wadi Yemm basement. The scope includes constructing multilevel basement structures that will support upcoming developments at the site.

    Rowad Modern Engineering is delivering the project in a joint venture with Lebanon’s Consolidated Contractors Company (CCC).

    The second contract covers substation works, to be delivered in a joint venture with local contractor Elsewedy Electric.

    Wadi Yemm is the first of the 17 planned precincts to move into active delivery. It is a mixed-use cultural and hospitality district, anchored by the Ras El-Hekma Lighthouse and a 10,000-seat amphitheatre, designed to host cultural and entertainment programmes.

    Ras El-Hekma is located on a spur of land on Egypt’s northern Mediterranean coastline, about 240 kilometres west of Alexandria.

    Abu Dhabi-based holding company ADQ appointed Modon Holding as the master developer for the Ras El-Hekma project in 2024. Modon will oversee the overall development, which covers more than 170 million square metres (sq m).

    Modon will develop the first phase of the project, covering 50 million sq m. The remaining 120 million sq m will be developed in partnership with private developers under the supervision of the recently established ADQ subsidiary Ras El-Hekma Urban Development Project Company and Modon.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18790805/main.jpg
    Yasir Iqbal