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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 2018-19 was driven by improving macroeconomic conditions, rise in commodity prices, and consumer spending. The Financial Services Industry (FSI) attracted a large portion of the investment by value (USD41 billion)1 followed closely by Energy, Resources and Industrials (ER&I) with USD40 billion 1. Brazil witnessed the highest number of deals (693)1 among all the Latin American countries, worth USD39 billion.1

M&A trends in Latin America

  • The M&A activity in Latin America is expected to pick up as the region comes out of a major election cycle and policy uncertainty. Many Latin American countries are rich in resources that are expected to drive investments in the oil & gas and mining sectors.2-7
  • Brazil remains an attractive investment destination with stable inflation, high Foreign Direct Investment (FDI), and strong forex reserves.2,8
  • 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

Industries

  • In 2018-19, FSI registered the highest M&A activity with deals worth ~USD 41 billion.1
  • ER&I recorded deals worth ~USD 40 billion over 2018-19, owing to a rise in demand for power.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 adoption of Internet-of-Things (IoT), wireless broadband and over-the-top applications.9,10,11
  • Life Sciences Healthcare (LSHC) M&A volume was driven by Healthcare 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.1
  • Outside the region, North America (especially the United States) and Europe (countries such as France, Italy, and UK) were the top investors in Latin America. The companies from these economies are looking to capture investment opportunities in developing markets.1

Challenges

  • Political uncertainties, corruption, and the lack of adequate infrastructure could also weaken market perception, thus affecting M&A activity.2-7
  • Uncertainty in decisions related to the United States Mexico Canada Agreement (USMCA) may hamper investors confidence.2-7
  • Overdependence on commodities, and volatile oil & commodity prices could restrain M&A activity in Latin America.2-7
  • The ongoing economic crisis in Venezuela and the influx of refugees may also dampen the investment attractiveness of the region.12

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

M&A trends in Latin America
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