The regional M&A slowdown is moderating somewhat

The bleeding in regional M&A has slowed, but it hasn't stopped. Regional M&A volumes fell 47% y-o-y to USD 48.7 bn in 1H, Zawya reports citing LSEG data — a steep drop, but a lighter one than 1Q's. Transaction count held far steadier, down just 2% y-o-y to 642, which means the average deal got a lot smaller: roughly USD 76 mn this year, versus an implied USD 140 mn in 1H 2025.

Why it matters: A 47% value decline against a nearly flat deal count is a market that hasn't frozen up, just gotten more cautious about size and risk. For dealmakers, that argues for structuring around smaller, more contained bets rather than waiting out the volatility for larger ones.

Outbound outpaces inbound: Deals targeting regional M&A windows came in at a two-year low for 1H figures, dropping 56% y-o-y against a backdrop of persistent regional instability. MENA-based investors struck a more confident note, recording USD 25 bn in outbound activity. However, that’s still down 38% y-o-y.

The UAE dominated the regional map. It was the most in-demand market in the region by a wide margin, with USD 16.5 bn in M&A activity, ahead of Saudi Arabia (USD 2.9 bn) and Morocco (USD 1 bn).

The materials, industrials, tech, and financial services led the charge. The largest agreement came from UAE-based critical and rare metals platform Miotal’s USD 10 bn merger with Fifth Era Acquisition Corp I SPAC vehicle, as securing critical materials for AI activity becomes increasingly important.

The gloomy results are still better than 1Q’s depressing recordings, when MENA M&A activity fell 74% y-o-y in value terms after the regional war dampened market sentiment. Similarly, it was inbound M&A that took the largest hit, falling 90% on a yearly basis. Once again, Emirati players were behind some of the biggest moves, with the Abu Dhabi Investment Authority’s (Adia) sale of its Pension Ins. Corporation Group stake topping the charts.

Looking further ahead, global M&A volumes, however, are expected to rise to USD 3.8 tn in 2026, after hitting a record USD 2.8 tn in 1H this year on the back of megadeals, with 47 transactions accounting for nearly half of the total global agreement value.

A rival count tells a different story

PwC's own mid-year tally (pdf), also out this week, counts just 272 M&A transactions across the Middle East in 1H 2026, down roughly 8% y-o-y — a fraction of the 642 LSEG reports for the same period. The discrepancy boils down to scope: PwC's “Middle East” doesn't appear to include Morocco (which LSEG's MENA data does, at USD 1 bn of 1H activity), and its list of the five largest regional transactions doesn't include the USD 10 bn Miotal/Fifth Era Acquisition Corp I merger that anchors the LSEG data — meaning PwC may be excluding SPAC mergers from its M&A count.

What PwC adds that's worth knowing on its own terms: PwC's own deal-size breakdown backs up the “smaller deals” pattern from a second angle: corporate buyers, not private equity, drove most of the activity (167 transactions to PE's roughly 105), and financial-services dealmaking fell from 75 transactions in mid-2025 to 53.

MARKETS THIS MORNING-

Asian markets are a sea of red this morning, as escalation in the Middle East and higher oil prices led to a sell-off, with Japan’s Nikkei falling 1.2% and South Korea’s Kospi dropping 1.8% at the open. Mainland China and Hong Kong stock benchmarks are also in the red. Over on Wall Street, futures are little changed after the same escalation weighed on the S&P 500 and Nasdaq.

THE CLOSING BELL-

The DFM rose 0.2% yesterday on turnover of AED 378.6 mn. The index is down 4.1% YTD.

In the green: National General Ins. Company (+4.1%), Emirates NBD (+3.0%), and Emirates Reem Investments Company (+2.8%).

In the red: Spinneys 1961 Holding (-2.4%), Aramex (-2.3%), and Emirates Integrated Telecommunications Company (-2.1%).

Over on the ADX, the index rose 0.7% on turnover of AED 980.3 mn. Meanwhile, Nasdaq Dubai was up 1.4%.