PETALING JAYA: The domestic mergers and acquisitions (M&A) landscape is set to see more deals flowing into 2026 compared to 2025, as global trade tensions ease and investors set their sights on South-East Asia, including Malaysia.
Technology-related and healthcare sectors, as well as manufacturing and consumer businesses, are expected to drive M&A activity in the country.
PwC Malaysia director of deals and transaction services Alan Foo told StarBiz he expects M&A activity to increase steadily in 2026.
He said this is because global trade tensions have continued to ease in late 2025, with a number of countries, including Malaysia, signing trade agreements with the United States.
“Domestically, we have also seen continued improvement in Malaysia’s gross domestic product, expanding by 5.2% in the third quarter of financial year 2025 (3Q25) versus 4.4% in the 2Q25, which demonstrates resilience in the local economy.
“In addition, the changing global landscape has resulted in further supply chain diversification that may benefit Malaysia, as investors seek to diversify away from China and into South-East Asia.
“As such, there may be potential foreign investors investing in local manufacturers as part of their expansion plans, and the increase in manufacturing outputs could boost demand for logistics and new warehousing facilities,” Foo noted.
He said artificial intelligence (AI) adoption is expected to influence M&A trends in 2026.
Technology-related sectors would likely drive the M&A market in 2026, given the significant global investment in AI, totalling nearly US$1.5 trillion in 2025, according to Gartner.
These investments are expected to drive interest in data centres, telco towers, semiconductor and electrical and electronics sectors, as well as renewable energy, which would benefit from the growth of AI.
He said the digital economy has been a key priority in government policy, hitting a record RM163.6bil in investments in 2024, based on the Malaysia Digital Economy Corp statistics, adding that this support is likely to continue through future initiatives.
Foo said defensive sectors such as healthcare would continue to appeal to investors due to their relative resilience to external shocks, supported by an ageing population and rising middle-class expectations for quality healthcare.
He said medical tourism is another area expected to attract investor interest, given Malaysia’s position as a regional medical tourism hub.
PwC Malaysia director of deals and transaction services Alan Foo
“In the past two years, we have witnessed several large hospital consolidations, such as Ramsay Sime Darby Health Care, Columbia Asia Healthcare and Island Hospital.
“We can expect continued consolidation of smaller hospital and clinic networks, diagnostics and labs, medical supplies and equipment businesses.
A study by PwC on global M&A trends in the health industries in 2025 observed that health services technology companies promoting value-based care, digital engagement or personalised preventive care are attracting strong M&A interest from both institutional and private equity dealmakers globally.
Deloitte Malaysia M&A partner Yap Kong Meng said the volume of M&A deals is expected to continue improving in 2026 after stabilising in the second half of 2025.
He said Malaysia’s M&A deal volume in 2025 was lower than in 2024, with inbound investment by foreign investors declining as some delayed or pulled back investments following the shock of the US tariff measures announced in February 2025.
He expects M&A activity to improve moving into next year.
Yap said there has been increasing inbound M&A interest in the semiconductor and technology supply chains in recent years, and this should persist in 2026.
“Manufacturing, consumer businesses and healthcare will continue to be sectors of interest.
“Financial investors such as private equity firms, and more recently private credit investors, continue to show interest in acquiring or supporting acquisitions in Malaysia across all sectors.
“Given the ongoing US-China geopolitical tensions, we are seeing more interest from foreign investors in conducting acquisitions in Malaysia as part of the wider and continuing supply-chain reorientation happening globally.
“This is further evidenced by the improving US dollar-ringgit exchange rate throughout 2025,” Yap added.
Deloitte Malaysia M&A partner Yap Kong MengAmong some of the M&A deals in 2025 were Accenture’s acquisition of Malaysia-based Aristal, marking its first banking-focused acquisition in the country; Global Infrastructure Partners and the Abu Dhabi Investment Authority’s buyout of Malaysia Airports Holdings Bhd
; Malaysia Aviation Group’s sale of MASwings to the Sarawak government, which is expected to be fully rebranded as AirBorneo sometime next year; and Japan-based Idemitsu Kosan’s acquisition of a 40% interest in two offshore blocks (SK427 and Ketapu Cluster) in Sarawak from SK Earthon.
Meanwhile, analysts expect more privatisation or M&A deals in the plantation sector moving into 2026.
Maybank Investment Bank Research (Maybank IB) noted that M&A activity in the industry has gained momentum this year.
In a report to clients in late October this year, the research outfit highlighted that such transactions – fuelled by sustained high crude palm oil prices, strong balance sheets and limited greenfield expansion opportunities – had reached about RM2.06bil year-to-date, almost doubling the RM1.08bil recorded in 2024.
It added that the momentum is expected to continue into next year, supported by “monetisation of prime estates by companies such as SD Guthrie Bhd, Genting Plantations Bhd and Kuala Lumpur Kepong Bhd.”
Among the key deals this year highlighted by Maybank IB was the privatisation and delisting of FGV Holdings Bhd, which could cost its parent, the Federal Land Development Authority, up to RM600mil.
This followed the earlier privatisation of Boustead Plantations by the Armed Forces Fund Board or LTAT for RM1.1bil in 2023.
The research house also observed that property-related transactions accounted for about 45% of the total M&A value this year, led by SD Guthrie’s sale of 484ha of land in Negri Sembilan’s Malaysia Vision Valley 2.0 for RM573mil.
The land will be developed into an industrial park under a joint venture led by Eco World Development Group Bhd.
Commenting on challenges that may hinder M&A activity in the country, PwC’s Foo said that although global geopolitical tensions may have eased towards the end of 2025, they would remain a key risk in 2026, influencing investor confidence.
He added that global economic growth has moderated this year, compared to the post-pandemic period, and remains fragile amid concerns over public debt levels and subdued consumer spending.
Deloitte’s Yap said economic and geopolitical uncertainty remains a key risk.
He said any new and material changes to US tariffs or the geopolitical situation could cause market outlook to deteriorate, trigger a slowdown in relevant industry sectors, or affect the Malaysian economy.
“Additionally, while the US Federal Funds Rate has declined moderately in the last 12 months, it is still high relative to the levels seen over the past 10 years.
“Countries and regions like Japan, the United Kingdom and Europe have exited their respective zero- and negative-interest-rate regimes and still maintain rates that are high relative to the last 10 years.
“Persistence of this situation could cause the general market valuation to decline over time, thereby reducing M&A transaction volume.
“Lastly, we have also observed that buyers are generally more cautious and make more conservative demands regarding due diligence, sale process protocols, and deal structuring in order to bridge earn-out,” he noted.
The term “bridge earn-out” specifically refers to an earn-out structure designed to bridge the gap between the buyer’s and seller’s valuations of a company.
