The Philippines secured only one merger and acquisition (M&A) deal in the first quarter of the year, reflecting a regional slowdown in foreign deal-making amid a challenging economic environment.

According to a report by business news platform DealStreetAsia, the country’s M&A deal volume dropped to a single transaction from January to March from nine deals during the same period in 2025.

The sharp decline meant the Philippines contributed just 2.1 percent to Southeast Asia’s total deal volume for the quarter, retreating from its 13.6 percent share last year.

DealStreetAsia reported that the region closed a total of 47 M&A transactions during the three-month period—a nearly 29 percent drop from the 66 deals recorded the previous year.

“The figure was also 41 percent below the average first-quarter volume recorded between 2018 and 2025, making it one of the weakest starts to a year since the dataset began," the report noted.

In terms of transaction value, Southeast Asia’s M&A deals in the first quarter plunged 37.7 percent to $7.6 billion from $12.2 billion in the same period last year.

DealStreetAsia attributed the weaker performance to a slowdown in inbound transactions—deals led by foreign acquirers targeting Southeast Asian assets.

The first quarter highlighted a complicated regional funding environment driven by elevated interest rates, subdued startup fundraising, and more disciplined capital deployment.

“Rather than pursuing scale at any cost, acquirers became more focused on profitability, integration risk, and valuation discipline,” DealStreetAsia said.

Strategic buyers accounted for the bulk of Southeast Asia’s M&A activity, driving 40 transactions during the reference period. Sponsor-led deals represented the remaining seven transactions, their highest first-quarter share since 2018.

By country, Singapore continued to lead the region with 27 deals, capturing 57.4 percent of the total volume across sectors such as transportation, retail, and infrastructure.

The largest transaction was KKR and Singtel’s acquisition of ST Telemedia Global Data Centres (STT GDC), valued at $5.1 billion—accounting for 67 percent of the region’s total transaction value. STT GDC is one of three companies in the STT GDC Philippines joint venture, alongside Globe Telecom Inc. and Ayala Corp.

Looking ahead, DealStreetAsia expects ongoing conflict in the Middle East to weigh on deal numbers this year, as foreign buyers exercise caution amid accelerating inflation, foreign exchange volatility, and tighter financial conditions.

However, the report noted that these geopolitical risks could also enhance the region’s appeal to companies looking to diversify their supply chains, particularly in manufacturing, logistics, and data centers.

“Overall, the story is not that Southeast Asia M&A has stopped,” the report read. “It is that dealmaking has become narrower, more selective and more strategic.”