Article

M&A in Latin America

Our comprehensive look at M&A trends in Latin America

For decades, Latin American countries have been a promising venue for global companies seeking to leverage the region’s rich natural resources, low-cost labor markets, and, more recently, expanding consumer markets.

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

Download the M&A trends in Latin America report and sources.

M&A trends in Latin America
Did you find this useful?