M&A in Latin America

M&A activity in Latin America increased in 2016-17 driven by improving macroeconomic conditions, rising government support, and increasing consumption. The Energy & Resources industry attracted most of the investments (USD80 bn) in 2016-17 because of the abundance of natural resources in the region. Brazil witnessed the highest number of deals (1,054) and attracted significant investments (USD95 bn) owing to its recovering economy and vast consumer base.

M&A trends in Latin America

• M&A activity in Latin America in 2017 resulted from improving economic growth and rising consumption. Many Latin American countries have rich resources driving investments in the Oil & Gas and mining sectors. Further, increasing disposable income and government reforms stimulate M&A activity in the region.^{1- 6}
  
• Brazil’s growing GDP, increasing consumer spending, and decreasing Selic rate help boost investor confidence, attracting business activity to the country.^8,9,10
  
• Argentina’s huge reserves of shale oil, strong government support, and rising disposable income may strengthen investments in energy, telecom, retail and other consumer facing sectors.^6,11
  

Industries

• Over 2016-17, Energy & Resources (E&R) registered the highest M&A activity (deals worth ~USD80 bn).⁷
  
• Abundant reserves of copper, lithium and cobalt to boost investments in the metals & mining sector, while deepwater and shale reserves to attract Oil & Gas companies and drive business investments.^11,12
• Consumer & Industrial Products (C&IP) recorded deals worth ~USD49 bn over 2016-17 owing to a rise in disposable income.⁷

• M&A in Financial Services was primarily driven by growth in the insurance sector, while that in Technology, Media, Telecommunications was ascribed to a surge in 3G and 4G subscriptions.^13,14

• Geographies

• In 2016-17, the majority of M&A activity in the region was intra-regional, with bigger economies, such as Brazil and Mexico being the top investors in the Latin American region.⁷

• North America (especially the United States) and Europe (countries such as Spain and the United Kingdom) were the top investors in Latin America’s inter-regional deals, as companies from these economies look to capture investment opportunities in developing markets.⁷

• Challenges

• Overdependence on commodities, and volatile oil and commodity prices could result in M&A activity in Latin America. ^{1- 6}

• Political uncertainties, corruption, and lack of sufficient infrastructure could also weaken market perception, thus affecting M&A activity. ^{1- 6}

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