M&A deals persist in January for uncertainty-plagued Mexico

After averaging about 27 deals per month in 2016, Mexico registered 20 M&A deals in January, nine of which disclosed transaction values totaling US$1.53bn.

The scenario represents a 5.26% increase in the number of deals carried out over January 2016 with a 40.6% decrease in disclosed value.

The analysis, provided by Transactional Track Record with the Merrill Corporation, indicated that of the nine non-discretionary transactions, four were valued under US$100mn; two between US$100-500mn and one hit the US$500mn threshold.

The US$500mn-deal involved Mexican concrete giant Cemex's sale of its reinforced concrete tubing operations to US firm Quikrete Holdings, with Bank of America Merrill Lynch and Citigroup Global Markets advising on the transaction.

Investor uncertainty and concerns over lower FDI in Mexico are paramount amid the newly strained relationship between the US and Mexico. However, that uncertainty could also provide opportunities.

"Pessimists think that the year is lost. They will let go of opportunities for inorganic growth and investment," said Gabriel Millán, a partner with investment bank Serficor interviewed by TTR. "It's likely that we will see an increase in the number of transactions between Mexican firms, as well as in non-traditional sectors like energy and infrastructure, promoted through novel [investment] instruments like Fibra E."

Real estate, financial and insurance firms showed the highest activity by sector in January with a total of four transactions each, followed by Internet-based and technology firms, with two each.

Looking at cross-border transactions, Mexican firms showed the greatest interest with investments abroad in Spain, the US, Colombia, Panama and Luxembourg with two deals in Spain and the US, and one each in the other nations.

Beyond the Cemex-Quikrete deal, investors from Spain and Canada expressed strong interest in Mexican firms in January, carrying out three and two transactions, respectively. Of these, Goldcorp's sale of Mina Los Filos to Canada's Leagold Mining was valued at US$438mn.

There were five venture capital deals involving Mexico in January – four more than in January 2016, with two disclosing deal value totaling US$72mn.