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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.

The M&A activity in Latin America in 2017-18 was driven by the improving macroeconomic conditions, rising government support, and increasing consumption. The Energy, Resources & Industrials industry attracted significant investments (USD 84 bn)1 in 2017-18 because of the abundance of natural resources in the region. Brazil witnessed the highest number of deals (752)1 and accounted for significant investments (USD 83bn)1 owing to its reviving economy and vast consumer base.

M&A trends in Latin America

  • In 2017, the M&A activity in Latin America was driven by its improving economic growth and rising consumption. Rich natural resources, increasing disposable income, and government reforms further stimulated M&A activity in the region.1- 6
  • Brazil’s growing GDP, increasing consumer spending, and business-friendly policies helped boost investor confidence, thus, attracting investments.2
  • Mexico’s rising GDP growth, low wages, a relatively skilled workforce, and deep integration into the US value chain encouraged investment in this region.1
  • The CPTPP (The Comprehensive and Progressive Agreement for Trans-Pacific Partnership) may facilitate the M&A activity in Latin America. 1-6

Industries

  • Over 2017-18, Energy, Resources & Industrials (ER&I) registered the highest M&A activity (deals worth ~USD 84 bn).1
  • Consumer (CNSR) recorded deals worth ~USD 25 bn over 2017-18, owing to a rise in the disposable income.1
  • M&A in Financial Services was primarily driven by the growth in the insurance sector. A deal worth USD15 billion was announced between XL group Ltd and AXA SA in this sector on May, 2018.1
  • Growth in Technology, Media, and Telecommunications (TMT) was mainly attributable to a rise in IT consulting services.1
  • The Life Science Healthcare sector is expected to be benefited by The CPTPP due to reduction of trade and regulation barriers.11

Geographies

  • In 2017-18, the majority of M&A activity in Latin America was intra-regional, with economies such as Brazil, the United States, 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, and volatile oil and commodity prices could restrain the M&A activity in Latin America.1- 6
  • Political uncertainties, corruption, and the lack of adequate infrastructure could also weaken market perception, thus, affecting the M&A activity.1- 6
  • Uncertainty in decisions related to the NAFTA agreement may hamper investors’ confidence.1-6

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

M&A trends in Latin America
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