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LONDON: Global dealmaking has reached $2.6 trillion, the highest for the first seven months of the year since the 2021 pandemic-era peak, as a quest for growth in corporate boardrooms and the impact of a surge in AI activity has overcome the uncertainty caused by US tariffs.

The number of transactions to August 1 is 16 percent lower than the same time last year, but their value is 28 percent higher, according to Dealogic data, boosted by US megadeals valued at more than $10 billion.

They include Union Pacific Corp’s proposed $85 billion acquisition of small rival Norfolk Southern and OpenAI’s $40 billion funding round led by Softbank Group.

The upsurge will be a relief to bankers who began the year with expectations the administration of US President Donald Trump would lead to a wave of consolidation.

Instead, his trade tariffs and geopolitical uncertainty made companies pause until renewed confidence in corporate boardrooms and the US administration’s anti-trust agenda changed the mood.

“What you’re seeing in terms of deal rationale for transactions right now is that it’s heavily growth-motivated, and it’s increasing,” Andre Veissid, EY Global Financial Services Strategy and Transactions Leader, told Reuters.

“Whether it’s artificial intelligence, the change in the regulatory environment, we see our clients not wanting to be left behind in that race and that’s driving activity.”

Compared with August 2021, when investors, rebounding from pandemic lockdowns drove the value of deals to $3.57 trillion, this year’s tally is nearly a $1 trillion, or 27 percent, lower.

Still deal-makers at JP Morgan Chase have said there is more to come, with companies pursuing bigger deals in the second half of the year as executives adapt to volatility.

“People have got used to the prevailing uncertainty, or maybe the unpredictability post-US election is just more predictable now,” Simon Nicholls, co-head of Slaughter and May Corporate and M&A group, said.

Nigel Wellings, partner at Clifford Chance said the market was moving beyond tariffs. “Boardrooms are seeing the M&A opportunity of a more stable economic environment and positive regulatory signals. But it is not a frothy market.”

From health to tech

While the healthcare sector drove M&A in the years after the pandemic, the computer and electronics industry has produced more takeover bids in the US and the UK in the last two years, according to Dealogic.

Artificial intelligence is expected to drive more dealmaking. M&A activity has increased around data center usage, such as Samsung’s $1.7 billion acquisition of Germany’s FlaktGroup, a data center cooling specialist.

Palo Alto Networks $25 billion deal for Israeli cybersecurity peer CyberArk was the largest deal in Europe, Middle East and Africa so far this year as rising AI-driven threats push companies to adopt stronger defenses.

Private equity, which had been sitting on the sidelines, has once again been active, with Sycamore Partners’ $10 billion deal to take private Walgreens Boots Alliance and rivalling 4.8 billion pound offers from KKR and Advent for UK scientific instrument maker Spectris.

The US was the biggest market for M&A, accounting for more than half of the global activity. Asia Pacific’s dealmaking doubled over the same year to date period last year, outpacing the EMEA region. 

RIYADH: Saudi Aramco reported a net profit of $22.67 billion for the second quarter of 2025, underscoring its operational strength and financial resilience amid ongoing market volatility. 

For the first half of the year, net profit reached $48.68 billion, supported by robust cash flows, consistent shareholder payouts and exceptional supply reliability. 

The company’s board declared a base dividend of $21.1 billion and a performance-linked dividend of $219 million for the second quarter, both scheduled for payment in the third quarter, according to a press release. 

In a statement, Amin Nasser, president and CEO of the energy firm, said: “Aramco’s resilience was proven once again in the first half of 2025 with robust profitability, consistent shareholder distributions and disciplined capital allocation.” 

He added: “Despite geopolitical headwinds, we continued to supply energy with exceptional reliability to our customers, both domestically and around the world.” 

While quarterly earnings came in strong, net profit dipped from $26.01 billion in the first quarter and $29.07 billion a year earlier, driven largely by weaker oil prices. The average realized crude oil price fell to $66.7 per barrel in the second quarter, down from $76.3 in the first quarter and $85.7 in the second quarter of 2024. 

Adjusted net income — a measure reflecting underlying performance — stood at $24.5 billion for the quarter and $50.9 billion for the first half. Cash flow from operating activities came in at $27.5 billion for the quarter and $59.3 billion for the half-year period, while free cash flow reached $15.2 billion in the second quarter and $34.4 billion over the six-month span. 

Nevertheless, Aramco maintained 100 percent supply reliability and pushed forward with key upstream projects. 

“Market fundamentals remain strong and we anticipate oil demand in the second half of 2025 to be more than 2 million barrels per day higher than the first half,” Nasser said, adding: “Our long-term strategy is consistent with our belief that hydrocarbons will continue to play a vital role in global energy and chemicals markets, and we are ready to play our part in meeting customer demand over the short and the long term.” 

During the media conference call following the earnings release, Nasser reiterated that Aramco’s performance over the first half of 2025 demonstrated the company’s resilience and ability to adapt effectively amid ongoing uncertainty and market volatility. 

“We have maintained our industry-leading financial position, which is a testament to our low-cost structure, operational discipline, strong financial position and ability to deliver on our broad plans,” the CEO said. 

In response to a question by Arab News, Nasser expressed confidence in Aramco’s ability to meet its strategic objectives, highlighting the strength of the company’s balance sheet. 

He emphasized that the current gearing ratio of 6.5 percent positions Aramco among the strongest globally in terms of financial stability. 

“We always look at potential to improve efficiency in our spending, building flexibility and discipline. This is embedded in our planning and capital discipline, and we have demonstrated that flexibility when appropriate, always recognizing the ability to generate long-term value,” he added. 

Aramco’s base dividend of $21.1 billion for the second quarter represents a 4.2 percent year-on-year increase, Nasser noted, adding that “this keeps us on track to deliver strong shareholder dividend distribution this year, subject to board discretion.” 

Ziad Al-Murshed, executive vice president and chief financial officer of Aramco, told Arab News: “We are maintaining our dividend distribution, which has been increased by 13 percent over the last three years. Again, that’s another testament to the financial strength of the company.” 

He aded: “Not only are we undertaking the largest capital program in our history due to unique opportunities, but we are also increasing dividends as we aggressively grow.”

On the market outlook, the Aramco CEO noted that global oil demand had shown notable resilience, supported by steady economic performance in major economies such as China and the US.

Physical market indicators also remained strong, reflecting the overall strength in market fundamentals. 

Nasser said that oil demand in the second half of the year is usually higher, on average, than the first half due to seasonal demand. 

“A strong demand for this new offering is a testament to the confidence of global investors in both Aramco’s financial resilience and our robust balance sheet,” he added. 

On upstream development, Aramco continued to advance the Berri, Marjan and Zuluf crude oil increments and confirmed that the Jafurah Gas Plant remains on track. Phase one of the Dammam development project was also brought onstream during the period. 

“Procurement and construction activities are progressing for Marjan crude oil increment and also for the Jafurah phase one gas plant, which are on track for completion this year,” Nasser stated. 

He added: “Phase one of our Dammam project has also been brought onstream. This project helps us to tap into around 850 million barrels of reserves in the Dammam complex.” 

Aramco’s downstream growth remains on track as the company expands its presence in new growth markets, launches new products and upgrades its portfolio. 

“We continue to pursue initiatives that drive incremental operating cash flow, including growing our liquid-to-chemical business and making performance improvements across the business,” Nasser said. 

He added that Aramco is also investing in five solar and two wind projects in the Kingdom, holding a 30 percent equity stake in each. 

“We believe hydrocarbons will continue to play a vital role in meeting global energy and chemical demand. Meanwhile, we are investing in innovation in carbon capture, hydrogen, renewables and digital innovation, with a focus on AI,” he said.