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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.

In 2018-19, M&A activity in Latin America was driven by privatization of state-owned companies, rise in consumption, reforms undertaken by governments, and decrease in benchmark rates in Latin American countries. The Energy, Resources, and Industrials (ER&I) industry attracted a large portion of the investment by value (USD58 billion), followed by Financial Services Industry (FSI) with USD49 billion. Brazil witnessed the highest number of deals (984), worth USD64 billion, among all the countries in Latin America.1-7

M&A trends in Latin America

  • M&A activity in Latin America is expected to pick up as a result of political stability, cross-border trade agreements, and reformist policies. The resource-rich advantage of many Latin American countries is expected to drive investments in the oil & gas and mining sectors.2-6
  • Brazil remains an attractive investment destination owning to political stability, overhaul of pension system, and auction of state-owned oil blocks. However, the drop in GDP in Q1 2019 may affect sentiments.2
  • Chile is strengthening ties with countries in Asia and Americas and focusing on renewable energy to attract investment.4

Industries

  • In 2018-19, ER&I registered the highest M&A activity with deals worth ~USD 53 billion.1
  • FSI recorded 384 deals worth ~USD 45 billion over the same period.1
  • Brazil and Mexico recorded the highest M&A activity in consumer (CNSR), which was primarily driven by the growth in disposable income.1
  • Technology, Media & Telecom (TMT) M&A was mainly driven by IT outsourcing, adoption of 4G, and Internet-of-Things (IoT).1
  • In Life Sciences Health Care (LSHC), the M&A volume was driven by Health care Provider & Services and Pharmaceuticals.1

Geographies

  • In 2018-19, the majority of M&A activity in Latin America was intra-regional, with economies such as Brazil, Chile, and Mexico being the top investor countries by value.1
  • Outside the region, North America (especially the United States), Europe (France and Italy), and Asia (China and Japan) were the top investors by value in Latin America. Firms from these economies are looking to capture investment opportunities in developing countries in Latin America.1

Challenges

  • Overdependence on commodities, and volatile oil and commodity prices could restrain M&A activity in Latin America.2-7
  • Uncertainty in decisions related to the United States Mexico Canada Agreement (USMCA) may affect investors confidence.3
  • Concerns over the debt sustainability and capacity constraints of PEMEX, Mexico’s national oil company. This is also negatively impacting the sovereign risk of the country.3

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

M&A trends in Latin America
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