Saudi Arabia is witnessing a rise in Mergers and Acquisitions (M&A), demonstrating the resilient nature of the Kingdom’s M&A market.
Mergers and acquisitions in Saudi Arabia recorded a 55% annual rise in 2024, as deal value reached $9.6 billion, driven by foreign investors and key sector activity.
The growth is driven by the country’s economic diversification efforts, especially its Vision 2030 strategy, which, among other things, encourages private sector participation and foreign investment in Saudi Arabia.
Vision 2030 of Saudi Arabia is a government development program launched by the Kingdom that aims to achieve the goal of greater economic, social, and cultural diversification. Arabia’s Vision 2030 envisions creating a vibrant and sustainable environment for local and international businesses through critical reforms, aiming to foster a more inclusive business landscape.
As part of the reforms launched in the wake of Vision 2030, Saudi Arabia has liberalised its rules and regulations regarding the formation of companies in the country by both foreigners and locals.
Advantages of Mergers and Acquisitions in Saudi Arabia
- Expanded market reach and diversification: M&A allows companies to penetrate new markets, enhance their customer base, and diversify their revenue streams. Additionally, it enables companies to reach a broader audience both domestically and internationally.
- Economics of Scale and Increased Resources: By pooling resources through the economics of scale and breadth, mergers and acquisitions (M&A) can result in cost reductions. It eliminates operational duplication and increases purchasing power for supply and raw materials. It provides businesses with Access to a broader pool of people, expertise, and innovative ideas.
The combined financial strength of merging companies can facilitate more significant investments and innovation apart from increased market share.
- Access to new technologies and innovation: The acquisitions may provide access to cutting-edge solutions, intellectual property, and new technologies—all of which are vital in industries such as manufacturing, healthcare, and technology.
What are the key Developments?
Increased Activity: M&A activity in Saudi Arabia has witnessed a notable increase in deal value and volume.
Sectoral Focus: Thanks to Vision 2030, the M&A activity has seen substantial growth in sectors such as technology, healthcare, and infrastructure, as well as areas like renewable energy and digital transformation.
Government Support: Saudi Arabia’s M&A process is actively encouraged by the Saudi government through streamlined regulatory processes, promotion of competition, and incentives for foreign investment.
Growth Despite Global Slowdown: Despite a slowdown in global M&A activity, the Saudi Arabia M&A market is exhibiting resilience and growth.
Regulatory Framework: The General Authority for Competition oversees M&A activities, ensuring fair competition and preventing monopolistic practices.
Examples of M&A activity:
- Energy and Materials: Reflecting Saudi Arabia’s significant energy resources and efforts to diversify its economy, high-value deals are prevalent in these sectors.
- Consumer Healthcare and ICT: A significant number of M&A deals also occur in these sectors, driven by the growing consumer market, healthcare reforms, and expansion of digital infrastructure.
- Foreign Investment: Foreign companies increasingly invest in Saudi Arabia through M&A, particularly in manufacturing, information and communication, and wholesale and retail trade.
- Strategic Acquisitions: Acquisitions are becoming a key tool for companies to expand their market reach.
Saudi Arabia M&A process
The Saudi Arabia M&A process includes:
- Finding prospective M&A candidates through market research and sector analysis.
- Executing accurate due diligence.
- Assessing the target company’s operational, legal, and financial elements and negotiating the deal’s conditions, such as the purchase price, payment structure, and post-acquisition arrangements.
- Getting the appropriate regulatory licenses from organizations like the Capital Market Authority and the Saudi Arabian Ministry of Investment.
- Closing the deal and implementing post-merger integration strategies, including drafting and executing definitive agreements, such as share price or merger agreements.
How can the Helpline Group in Saudi Arabia help?
Helpline Group, backed by a strong and experienced team, has over 25 years of expertise in business setup in Saudi Arabia, offering a seamless and hassle-free experience for clients, including foreigners.
With a global presence and a tailored approach, we ensure that your Saudi Arabia business acquisition proposals are handled with precision and professionalism, making us your reliable ally.
