Mexican M&A activity slips further in February

Mexico continued to see M&A activity slide in February with the number of transactions down 41.7% year-on-year and the total reported value of transactions falling 75.4% from February 2016.

There were 14 M&A transactions in February, and of those, three reported values totaling US$606mn, according to a report from Transactional Track Record (TTR), with support from the Merrill Corporation.

The report reflects a deepening slowdown in activity for Mexico, which is currently plagued by uncertainty around its own economic challenges and the precarious trade scenario unfolding with the US.

The TTR report noted that there have been 37 transactions in Mexico year-to-date, a 14.0% decline over the same period of 2016, while the reported YTD value reached US$2.144bn – off 57.5% from the previous year.

Furthermore, the deals that have occurred thus far in 2017 have tended to be smaller in value. Of the 13 operations with reported values, eight were priced at less than US$100mn, four were set between US$100mn and US$500mn, and only one surpassed US$500mn.

SECTORS

Sector-by-sector, banking and insurance firms managed to maintain the same number of transactions in January and February as the seven seen in the same period of 2016. The real estate industry also saw seven transactions thus far in 2017.

TTR spotlighted Group Hotelero Santa Fe's US$120mn purchase of hotel chains in Los Cabos and Nuevo Vallarta as its M&A deal of the month in February.

Looking at cross-border activity in February, firms from Mexico carried out four transactions abroad and the largest cross-border deal for a Mexican firm was with Panama in a US$5.5mn transaction.

Spanish, US and Chilean firms showed the most interest in acquiring Mexican assets, where three operations took place for Spain, and two with Canada, the US and Chile. By value, the biggest deal involved a Canadian firm (US$440mn) deal and a Spanish company (US$10.6mn).

In other M&A news, Mexican regulators recently cleared the final hurdle in upscale department store chain Liverpool's 19bn-peso (US$960mn) acquisition of low-price chain Suburbia – a deal first announced last year, paving the way for Liverpool to convert Suburbia's 119 stores into Liverpool's own Fabricas de Francia and Liverpool Duty Free stores over the next two years.