Investing in the supply chain has emerged as a key theme for construction mergers and acquisitions (M&A) activity as companies seek to mitigate delivery concerns as project activity ramps up in many key markets, including the Middle East.

Globally, there were $212bn of construction mergers and acquisitions (M&A) deals in 2023, according to a thematic intelligence report by GlobalData.

The total value of deals was down 39% when compared to the previous year. North America was the most active region by value with $98bn of deals, a drop of 40% when compared to 2022. The Middle East had $3bn of deals, which was down 25% on the previous year.

By volume, there were 3,164 construction M&A deals in 2023, which was a 21% decline when compared to 2022. Again, North America was the most active region with 1,224 deals, which was 21% less than 2022. The Middle East recorded 84 deals, which was a drop of 26% when compared to the previous year.

The biggest deals in the Middle East during 2023 were in Saudi Arabia, where the Public Investment Fund (PIF) invested $1.3bn in four local construction companies to support the handling of projects across the kingdom. The PIF has acquired new shares in AlBawani Holding Company, Almabani General Contractors Company, ElSeif Engineering Contracting Company and Nesma & Partners Contracting Company.

The investment was aimed at allowing the firms to scale up their capacity, adopt advanced technologies and improve local supply chains.

Investing in the supply chain was the most prominent theme for construction sector mergers and acquisitions (M&A) in terms of deal value during 2023 according to the GlobalData report.

There were $31bn of M&A deals during the year that were supply chain-related. The second most significant theme was emerging economies, which accounted for $12bn of deals. The other main themes were environment, social and governance (ESG), with $4bn of M&A activity; electric vehicles, with $4bn of deals; and asset management, which accounted for $2bn of deals.

The largest supply chain M&A deal was the merger of Nippon Steel, a Japanese steelmaker and one of the world’s leading steel manufacturers, and United States Steel, a steel producer with competitive advantages in low-cost iron ore and mini-mill steelmaking. That deal was valued at $1.49bn.