Latin America M&A volume and value down in Q1 2017

  • M&A value increases year-on-year; PE and VC value down on Q4 2016
  • Zephyr reports on Latin America M&A activity in Q1 2017

The volume and value of mergers and acquisitions (M&A) targeting companies in South and Central America declined in Q1 2017, according to information collected by the leading M&A database Zephyr. In all there were 154 deals worth a combined USD 7,405 million announced during the three month period. By volume this represents a 4 per cent decline on the 161 deals announced in Q4 2016, while value dropped 58 per cent from USD 17,735 million over the same timeframe. Year-on-year volume was also down from 188, while value increased from USD 5,433 million.

Zephyr shows that in keeping with the overall decline posted in Q1, just one deal broke the USD 1,000 million-barrier. That deal was worth USD 1,331 million and took the form of a capital increase by Brazilian motorway operator CCR. Proceeds have been earmarked for strengthening the group’s cash structure, as well as maintenance, expansion and diversification of its concessions network. That deal dwarfed the second-placed deal in Q1 as German brewer Bavaria agreed to pick up Brazilian beer maker Brasil Kirin for USD 706 million. Only one other deal was worth over USD 500 million as Delta Air Lines upped its holding in Grupo Aeromexico from 4 per cent to 36 per cent for USD 609 million. In all, 15 of the quarter’s top 20 deals by value featured Brazilian targets, while Mexico was targeted in three deals and Chile featured in two.

Zephyr shows that Brazil was the most frequently targeted country in Latin America in Q1, having been targeted in 75 deals worth USD 5,246 million. Mexico and Chile placed second and third, respectively, on both fronts with 23 deals worth USD 1,412 million and 20 worth USD 421 million. Most countries declined in terms of value in Q1; the only exceptions were Trinidad and Tobago, which increased from USD 30 million in Q4 to USD 85 million, while Panama featured in deals worth USD 27 million, having failed to attract any value in Q4.

Lisa Wright, Zephyr director, commented, “At first glance Q1 2017 appears to have been fairly disappointing in terms of M&A activity in Latin America. Only one deal was worth in excess of USD 1,000 million, resulting in a decline in both volume and value on Q4 2016. However, the fact that value has improved on Q1 2016, when there was also a single deal worth over USD 1,000 million, is encouraging. This means we can conclude that 2017 is so far on track to surpass 2016 by deal value. If the coming quarters continue to see greater levels of dealmaking than in the corresponding periods of last year we could see a fairly pleasing result when December rolls around.”

The Zephyr database shows that Q1 was also disappointing in terms of private equity dealmaking as value declined on Q4 2016. However, volume actually increased over the three months as USD 436 million was invested across 34 deals. The opposite pattern was detected year-on-year as despite value increasing slightly from USD 430 million in Q1 2016, volume was down 17 per cent from 41 to 34 over the same timeframe, thereby suggesting higher individual considerations in Q1 2017. Advent International backed the largest PE and VC deal in Q1 2016 as GTM do Brasil Comercio de Produtos Quimicos agreed to pick up QuantiQ Distribuidora for USD 172 million.

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