Internet firms lead slow start to Mexican M&A in 2019

M&A activity in Mexico showed further signs of weakening in February, with research firm Transactional Track Record (TTR) reporting 18 transactions in the month, down 50% year-on-year, with a total reported deal value of US$1.65bn.

TTR said in a statement nine of the operations were ongoing (reported deal value US$1.262bn) and 10 completed (US$388mn).

The firm said there were 44 transactions in the first two months of 2019 in Mexico, down 31% year-on-year, with reported deal value totaling US$1.914bn, up 8.63%.

By sector, M&As related to internet firms stood out in January and February, generating nine deals, up 80%. The two months also produced seven operations in the financial and insurance sectors, down 36%; six real-estate sector deals, down 14%; and six in other technology-related firms, up 50%.

TTR said that since 2010 the main thrust of M&A operations in Mexico has been US firms looking for acquisitions. Nevertheless, there have been only five such operations in 2019 – 50% fewer than in the same period 2018.

"However, companies dedicated to the technology and internet sector have attracted the most foreign investments in recent years, and the registration of five operations in this segment [last month alone] represents an increase of 150% with respect to the figures reported in February 2018," said TTR.

Outbound deals from Mexico have largely targeted US properties, producing eight deals in January and February. There were two outbound deals each to both Peru and Spain, and the largest single deal amount was US$333mn for the acquisition of Telefónica Guatemala by Mexico's América Móvil.

There were two deals each from the UK and Luxembourg and the UK deals were worth US$808mn, TTR said.

The firm said there were no private equity deals in Mexico in the first two months of the year, compared to five in the same periods of both 2018 and 2017.

There were 11 venture capital transactions, down 31% year-on-year, with reported deal value of US$90mn, or 48.5% lower.