Despite challenges, LatAm sees M&A gains in 2016

Helped by a strong surge in fourth quarter activity, the number of mergers and acquisitions in key Latin America markets rose to 2,071 in 2016, up 3% from 2,018 in 2015.

The total value for 920 publicly reported transactions in Brazil, Mexico, Chile, Argentina, Peru and Colombia reached US$140bn, a 19% improvement from the US$$117bn value with 839 reported deals in 2015, according to a report from Transactional Track Record.

In an interview with TTR, Pablo D'Angliano, managing director of Providence Capital, said the regional M&A climate last year was challenging and that 2016 had been a "hard year" in every aspect due to slow GDP growth, falling commodity prices and domestic problems in some countries.

The fourth quarter was responsible for 35% of the total reported value of M&A activity in 2016 with 597 deals. The value for the 262 transactions that disclosed financial details totaled US$49.4bn.

As for the number of M&A deals, Brazil led with 1,040, which represented an increase of 18.3% in value for reported deals. Mexico followed next with 314 transactions, representing a decrease of 9.05% in reported deal value.

The finance and insurance sectors, particularly in Argentina, Chile, Colombia and Peru, attracted the most M&A in 2016, followed by real estate, according to the report.

Chile continued to show rising activity in M&A, generating 225 deals in 2016 and a 164% leap in the value of publicly reported transactions, overtaking Argentina, which managed to see 206 deals. Nevertheless, the value of reported deals for Argentina shined in 2016 with a 641% increase from 2015.

At the back of the pack, Colombia and Peru produced 175 and 152 M&A operations, respectively, for increases in total reported value of 72.2% in the case of Colombia and 13.3% in Peru.

INTERNATIONAL M&A

Cross-border activity last year saw Latin American firms making 14 acquisitions in the US and Canada, as well as buying 10 firms in Europe. The regions and nations showing the strongest interest in Latin American acquisitions last year were European countries with a total of 79 deals, followed by the US and Canada with 73 operations, Asia (19) and Oceania (8).

TTR cited I Squared's purchase of energy infrastructure assets in El Salvador, Guatemala, Ecuador, Peru, Chile and Argentina from Duke Energy International for an estimated US$1.2bn as the most noteworthy deal in 4Q16.