Values of LAC M&A deals jump in 1Q17

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Friday, April 21, 2017

M&A activity in Latin America and the Caribbean saw more transactions and significantly higher reported values in the first quarter of 2017.

Research firm Transactional Track Record (TTR) reported a total of 501 operations taking place in the first three months of 2017 and the reported values for 184 of these deals totaled US$38.2bn.

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Compared to 1Q16, the results represent a 4.38% increase in the number of operations and an impressive 74.73% year-on-year jump in reported values.

There were 24 private equity deals in the LAC region in the first quarter, with three reporting their value at a total of US$808mn. This was a 55% year-on-year drop in the number of such transactions and a 67% decrease in the reported values.

Venture capital was brighter in the region during the period, reflected in 67 deals with values reported for 30 of them, totaling US$254mn. This was a 43% year-on-year increase in the number of transactions and a 77% improvement in reported capital exchanged.

"While the dynamism in Latin America with venture capital is not reaching levels like countries such as the US, the growth in activity and capital mobilized in this segment for the region reflects the awakening in entrepreneurship in regions like Brazil, Mexico, Chile and Argentina, which demonstrated important investment flows in 2016 and so far in 2017," said Marcela Chacón Sierra, LAC business research analyst for TTR, told BNamericas.

There were 34 Internet venture capital deals in the first quarter, a 42% increase; however, there were only 19 venture capital transactions with technology firms, down 27%.

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In the first quarter, Brazil remained the region's leader in M&A activity, with 256 transactions (up 6% year-on-year) and a 249% hike in total reported values for 69 of the deals to US$20.0bn. Chile followed with 69 deals (+28%), falling 47% in reported values to US$2.07bn.

While Mexico saw a 7% increase in total transactions for the quarter to 64, the reported values fell 21% to US$6.70bn. Argentina produced 58 deals (+23%) for a 5% increase in reported values (US$1.44bn).

LAC firms carried out 32 acquisitions outside the region in the first quarter, with 23 in the US and Canada, eight in Europe and one in Asia. Conversely, companies based outside the region made 118 acquisitions within the LAC from January to March, with 56 from the US and Canada, 52 from Europe, eight from Asia and two from Australia.

TTR selected the acquisition of soy beverage manufacturer AdeS by Coca-Cola Company and Coca-Cola Femsa as the highlight for the quarter. The soft drink giant purchased AdeS from Unilever for US$575m, closing the deal in late March. The transaction involved the acquisition of subsidiaries and assets throughout much of the region, including AdeS Brasil, AdeS Argentina, AdeS México, AdeS Uruguay, AdeS Paraguay, AdeS Colombia, AdeS Chile and AdeS Bolivia.

Lazard and Alfaro Dávila y Ríos handled financial consulting for the transaction. Legal counsel for the deal was provided by Lobo & de Rizzo Advogados, Clifford Chance, TozziniFreire Advogados, Berkemeyer, Curtis, Mallet-Prevost, Colt & Mosle, Von Wobeser y Sierra, Baker & McKenzie and Trench, Rossi e Watanabe Advogados.