M&A in Latin America

The M&A activity in Latin America in 2017–18 was driven by stabilizing macroeconomic conditions, substantial investments, rising government support, and increasing consumption. The Energy, Resources & Industrials industry attracted many of the investments (USD 92 billion)¹ in 2017–18 because of the abundance of natural resources in the region. Brazil witnessed the highest number of deals (744)¹ and accounted for significant investments (USD 70 billion)¹ owing to its reviving economy and vast consumer base.

M&A trends in Latin America

• In 2018, M&A activity in Latin America was driven by improving economic growth, increasing consumption and private investments.
  
• Low interest rates along with increasing disposable income and government reforms further stimulated M&A activity in the region.^2-7
  
• The CPTPP (The Comprehensive and Progressive Agreement for Trans-Pacific Partnership) may demonstrate to be a facilitator for M&A activity in Latin America. ^2-7
  
• Peru’s trade liberalization and bilateral deals may result into greater M&A inclusion.⁶
  
• Mexico’s rising GDP growth, low wages, a relatively skilled workforce and deep integration in the US value chain has encouraged investment in this region.³

Industries

• Over 2017-18, Energy, Resources & Industrials (ER&I) registered the highest M&A activity (deals worth ~USD 92 billion).¹

• Consumer (CNSR) recorded deals worth ~USD 30 billion over 2017-18, owing to a rise in the disposable income.⁷

• Brazil and Mexico recorded the highest M&A activity in Financial Services, which was primarily driven by the growth in the insurance sector.^1,32

• Growth in Technology, Media, and Telecommunications (TMT) was mainly attributable to IT development.^20,21
• The Life Science Healthcare (LSHC) sector is expected to benefit from the rising demand for medicines and regulatory advancements.^23,24

Geographies

• In 2017-18, the majority of M&A activity in Latin America was intra-regional, with economies such as Brazil, the United Sates, and Mexico being the top investors, whereas, Brazil, Mexico, and Chile were top investor destinations.¹

• Outside the region, North America (especially the United States) and Europe (countries such as France and Spain) were the top investors in Latin America’s inter-regional deals.¹

Challenges

• Overdependence on commodities such as copper, and volatile oil and commodity prices could restrain M&A activity in Latin America.^2-7

• Corruption combined with low educational levels and the lack of adequate infrastructure could also dampen investor confidence, resulting in low M&A activity in the region.^2-7

• Uncertainty in decisions related to the United States Mexico Canada Agreement (USMCA) may hamper investors’ confidence.^2-7
  

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