MampA in Latin AmericaAmericas regionAmericas Financial Advisory7th Edition ndash August 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Contents

Executive summary 3

2016-2017 MampA snapshot 4

Top deals in 2016-2017 5

Macroeconomic indicators 6

Geographical MampA activity 7-14

MampA activity across industries 15-20

Perspectives 21-22

Leadership contacts 23-25

AppendixSourcesPresentation notes

2627-28

292

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA in Latin America activity in 2016-17 continued to remain weak owing primarily to political instability challenging macroeconomic conditions and falling commodity prices Energy amp Resources (~USD67 billion) industry attracted the highest investments in 2016-17 because of the abundance of natural resources in the region Brazil witnessed the highest number of deals (923) and attracted significant investments (USD75 billion) driven mainly by its vast consumer base

3

Refer to ldquoSourcesrdquo appendix for citations

Executive summary

bull MampA activity in Latin America remained subdued in 2016-17 primarily as a result of weak economic growth Many of the Latin American countries are dependent on oil and gas and mining sector for growth Therefore weak oil and commodity markets have affected MampA activity in the region123456

bull Uncertainty over North American Free Trade Agreement (NAFTA) negotiations has adversely affected investor confidence in Mexico especially in the manufacturing sector as Mexico exports over 80 of its goods to the US7

bull Catastrophic floods in Peru led to a decline in local industrial activity and consumer demand affecting MampA activity in consumer facing sectors in the short term8

MampA trends in Latin America

bull Energy amp Resources (EampR) industry observed the highest MampA activity in 2016-17 with ~USD67 billion in deal value Ample reserves of oil and natural resources in the region lower valuation of oil and gas assets resulting from decline in oil prices government policies to promote renewable energy and reforms in the mining sector could attract large investments in Latin America and drive MampA activity139

bull The emerging middle class and vast domestic markets of Brazil and Mexico may drive MampA activity in consumer facing industries like Consumer and Industrial Products(CampIP) and Technology Media and Telecommunications (TMT)12

Industries

bull In 2016-17 the majority of MampA activity in the region was intra-regional with bigger economies such as Brazil and Mexico being top investors in the region9

bull North America (especially the United States) and Europe (countries such as United Kingdom and Spain) have led cross-border MampA activity in Latin America as companies from these economies look to capture investment opportunities in developing markets9

Geographiesbull Despite the government implementing reforms weak

macroeconomic conditions overdependence on commodities for growth and falling oil and commodity prices continue to negatively impact the MampA activity in Latin America 123456

bull Political uncertainty owing to impending elections insufficient infrastructure rising inflation and growing corruption could affect investor investments and reduce MampA activity 123456

Challenges

2017 includes data from January 1 2017 to May 31 2017Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America MampA deal inflow totaled 2019 deals worth USD1259 billion between January 1 2016 and May 31 2017

2016-2017 MampA snapshot9

4

Value (USD bn) Volume of deals

Top Investor

Companies

$21

3

$9

5

$9

101

$5

1Vale SA

$6

1

State Grid Brazil Power

Nova Infraestrutura

FIPInvestor Group

Sompo Japan Nipponkoa Ins

Inc

Top InvestorCountries

$58

565

$14

225

$8

140

$6

14

Brazil$7

112

United States JapanMexico Canada

Top TargetIndustries

$67

447

$32

810

$21

361

$1

139

Energy and Resources $6

261

Consumer amp Industrial Products

Life Sciences amp HealthCare

Financial Services

Technology Media Telecom

Top DestinationCountries

$75

923

$11

34

$11

189

$7

171

Brazil$8

253

Bermuda ArgentinaChile Mexico

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Top deals in 2016-20179

5Refer to ldquoSourcesrdquo appendix for citations

Target Target industry Acquirer Acquirer industryValue of

transaction (in USD million)

Valepar SA Energy and Resources (EampR) Vale SA Energy and Resources

(EampR) 20957

Endurance Specialty Holdings

Financial Services Industry (FSI)

Sompo Japan Nipponkoa Ins Inc

Financial Services Industry (FSI) 6300

Nova Transportadora do Sudeste

Energy and Resources(EampR) Nova Infraestrutura FIP Financial Services

Industry (FSI) 5190

CPFL Energia SA Energy and Resources (EampR) State Grid Brazil Power Energy and Resources

(EampR) 3659

Ironshore Inc Financial Services Industry (FSI)

Liberty Mutual Insurance Co

Financial Services Industry (FSI) 2935

Vale Fertilizantes SAConsumer andIndustrial Products(CampIP)

The Mosaic CoConsumer andIndustrial Products(CampIP)

2760

Petrobras-Block BM-S-8

Energy and Resources (EampR)

Statoil Brasil Oleo e Gas Ltda

Energy and Resources (EampR) 2500

Petrobras-Certain Assets

Energy and Resources (EampR) Total SA Energy and Resources

(EampR) 2225

XP Holding Investimentos SA

Financial Services Industry (FSI) Itau Unibanco SA Financial Services

Industry (FSI) 1989

Isagen SA ESP Energy and Resources (EampR) Investor Group Financial Services

Industry (FSI) 1978

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Macroeconomic indicators10

6

2017 macroeconomic indicators (forecast)

Country

Nominal GDP (USD

billion)

Real GDP change

per annum

()

GDP per head(USD)

Inward FDI flowGDP ()

Exchange rate LCUUSD

Consumerprices

( change per annum)

Lending interest

rate ()

Argentina 646 25 14592 19 1636 262 245

Brazil 2039 05 9817 32 325 40 485

Chile 265 16 14491 51 66810 28 53

Colombia 314 20 6405 45 295380 42 139

Mexico 1102 19 8466 23 1925 57 56

Peru 214 30 6746 25 330 33 167

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Geographical MampA activity

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America 3683

North America 1064

Europe 915

Asia-Pacific 346 AfricaMiddle

East 6391 66 57 40 37

Australia Japan China Hong Kong Singapore

Intra-regional deals drove most MampA activity North America and Europe lead the pack in inter-regional deals

Latin America

61

North America

15

Europe14

Asia-Pacific8

AfricaMiddle East2

Deal value = USD490billion

34 24 12 10 05

Qatar Israel Mauritius Utd ArabEm

South Africa

127 95 84 60 20

Hong Kong China Japan Singapore Australia

Deal volume = 6578

Top acquirer nations by deal value (2013-17) in USD billion9

Top acquirer nations by deal volume (2013-17)9

Refer to ldquoSourcesrdquo appendix for citations8

119 95 77 74 73

UnitedKingdom

Spain Italy Luxembourg France

1769

573 376 325 179

Brazil UnitedStates

Mexico Chile Bermuda

19 16 12 7 2

Utd ArabEm

Israel South Africa Qatar Mauritius

177 167 135 67 55

Spain UnitedKingdom

France Germany Netherlands

1725

742479 407 322

Brazil UnitedStates

Mexico Chile Canada

Region of 507 deals in not disclosed

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

030060090012001500

0

25

50

75

EampR CampIP TMT FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Investments may remain subdued in the short term owing to uncertainties around 2018 elections corruption scandals involving the president and rising public debt However the vast domestic market ample natural resources and attractive asset prices (owing to currency devaluation) may appeal to investors in the long term

Brazilrsquos political instability and weak macroeconomic fundamentals could hurt investment activity in the near-term

9

0

200

400

600

800

010203040506070

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume bull The Economist Intelligence Unit (EIU) predicts the Brazilian real would weaken to R40 USD10 by 2021 as the interest rate gap with the US narrows thus making Brazilian assets and companies more attractive to foreign investors1

bull Moreover investors continue to see long-term potential in Brazil as a result of its vast domestic consumer market and ample natural resources 1

bull GDP is expected to grow ~02 in 2017 and to grow ~2 in 2018 which will favor economy recovery and hence help strengthen MampA activity1

o The Central Bank of Brazil is expected to continue to reduce interest rates at a faster pace (currently at 1025) until it reaches 875 by 3Q17 which can contribute to a reduction in interest expenses of corporations and families therefore helping to generate more cash for investments and to reduce leverage1

o According to the EIU inflation has eased from 63 in 2016 standing currently at 45 and is expected to fall further to 4 by 2021 This will help improve consumer demand1

bull Retail financial services health care infrastructure and telecommunications will likely perform above the overall average in the long term as private consumption slowly picks up (from -42 of GDP in 2016 to -07 in 2017) thus favoring MampA deals in these sectors1

MampA unfavorable factors

MampA deals in Brazil 2013-179

MampA deals in Brazil by investor country and target industry (2013-17)9

bull Political instability is elevated as there is uncertainty around the upcoming presidential elections (October 2018) Also the current president Michel Temer faces corruption investigation This could negatively affect investor sentiment and could lead to substantial weakening of key proposed reforms primarily related to the pension system and labor market111

bull Services sector which constitutes 70 of GDP is unlikely to recover much growth in the medium-term resulting from challenges such as low productivity and skills shortage despite rising unemployment This may act as a hindrance to attract investors to this sector1

bull Weakening economic conditions rising fiscal deficit rising public debtGDP ratio (from 70 in 2016 to ~87 in 2020) and increasing unemployment (from 65 in 2014 to ~13 in 2017)are increasing the cost of finance for households12

United States United Kingdom Luxembourg

MampA favorable factors

0

500

1000

1500

2000

0306090

120150180

Brazil US UK Lux Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Brazil

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Contents

Executive summary 3

2016-2017 MampA snapshot 4

Top deals in 2016-2017 5

Macroeconomic indicators 6

Geographical MampA activity 7-14

MampA activity across industries 15-20

Perspectives 21-22

Leadership contacts 23-25

AppendixSourcesPresentation notes

2627-28

292

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA in Latin America activity in 2016-17 continued to remain weak owing primarily to political instability challenging macroeconomic conditions and falling commodity prices Energy amp Resources (~USD67 billion) industry attracted the highest investments in 2016-17 because of the abundance of natural resources in the region Brazil witnessed the highest number of deals (923) and attracted significant investments (USD75 billion) driven mainly by its vast consumer base

3

Refer to ldquoSourcesrdquo appendix for citations

Executive summary

bull MampA activity in Latin America remained subdued in 2016-17 primarily as a result of weak economic growth Many of the Latin American countries are dependent on oil and gas and mining sector for growth Therefore weak oil and commodity markets have affected MampA activity in the region123456

bull Uncertainty over North American Free Trade Agreement (NAFTA) negotiations has adversely affected investor confidence in Mexico especially in the manufacturing sector as Mexico exports over 80 of its goods to the US7

bull Catastrophic floods in Peru led to a decline in local industrial activity and consumer demand affecting MampA activity in consumer facing sectors in the short term8

MampA trends in Latin America

bull Energy amp Resources (EampR) industry observed the highest MampA activity in 2016-17 with ~USD67 billion in deal value Ample reserves of oil and natural resources in the region lower valuation of oil and gas assets resulting from decline in oil prices government policies to promote renewable energy and reforms in the mining sector could attract large investments in Latin America and drive MampA activity139

bull The emerging middle class and vast domestic markets of Brazil and Mexico may drive MampA activity in consumer facing industries like Consumer and Industrial Products(CampIP) and Technology Media and Telecommunications (TMT)12

Industries

bull In 2016-17 the majority of MampA activity in the region was intra-regional with bigger economies such as Brazil and Mexico being top investors in the region9

bull North America (especially the United States) and Europe (countries such as United Kingdom and Spain) have led cross-border MampA activity in Latin America as companies from these economies look to capture investment opportunities in developing markets9

Geographiesbull Despite the government implementing reforms weak

macroeconomic conditions overdependence on commodities for growth and falling oil and commodity prices continue to negatively impact the MampA activity in Latin America 123456

bull Political uncertainty owing to impending elections insufficient infrastructure rising inflation and growing corruption could affect investor investments and reduce MampA activity 123456

Challenges

2017 includes data from January 1 2017 to May 31 2017Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America MampA deal inflow totaled 2019 deals worth USD1259 billion between January 1 2016 and May 31 2017

2016-2017 MampA snapshot9

4

Value (USD bn) Volume of deals

Top Investor

Companies

$21

3

$9

5

$9

101

$5

1Vale SA

$6

1

State Grid Brazil Power

Nova Infraestrutura

FIPInvestor Group

Sompo Japan Nipponkoa Ins

Inc

Top InvestorCountries

$58

565

$14

225

$8

140

$6

14

Brazil$7

112

United States JapanMexico Canada

Top TargetIndustries

$67

447

$32

810

$21

361

$1

139

Energy and Resources $6

261

Consumer amp Industrial Products

Life Sciences amp HealthCare

Financial Services

Technology Media Telecom

Top DestinationCountries

$75

923

$11

34

$11

189

$7

171

Brazil$8

253

Bermuda ArgentinaChile Mexico

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Top deals in 2016-20179

5Refer to ldquoSourcesrdquo appendix for citations

Target Target industry Acquirer Acquirer industryValue of

transaction (in USD million)

Valepar SA Energy and Resources (EampR) Vale SA Energy and Resources

(EampR) 20957

Endurance Specialty Holdings

Financial Services Industry (FSI)

Sompo Japan Nipponkoa Ins Inc

Financial Services Industry (FSI) 6300

Nova Transportadora do Sudeste

Energy and Resources(EampR) Nova Infraestrutura FIP Financial Services

Industry (FSI) 5190

CPFL Energia SA Energy and Resources (EampR) State Grid Brazil Power Energy and Resources

(EampR) 3659

Ironshore Inc Financial Services Industry (FSI)

Liberty Mutual Insurance Co

Financial Services Industry (FSI) 2935

Vale Fertilizantes SAConsumer andIndustrial Products(CampIP)

The Mosaic CoConsumer andIndustrial Products(CampIP)

2760

Petrobras-Block BM-S-8

Energy and Resources (EampR)

Statoil Brasil Oleo e Gas Ltda

Energy and Resources (EampR) 2500

Petrobras-Certain Assets

Energy and Resources (EampR) Total SA Energy and Resources

(EampR) 2225

XP Holding Investimentos SA

Financial Services Industry (FSI) Itau Unibanco SA Financial Services

Industry (FSI) 1989

Isagen SA ESP Energy and Resources (EampR) Investor Group Financial Services

Industry (FSI) 1978

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Macroeconomic indicators10

6

2017 macroeconomic indicators (forecast)

Country

Nominal GDP (USD

billion)

Real GDP change

per annum

()

GDP per head(USD)

Inward FDI flowGDP ()

Exchange rate LCUUSD

Consumerprices

( change per annum)

Lending interest

rate ()

Argentina 646 25 14592 19 1636 262 245

Brazil 2039 05 9817 32 325 40 485

Chile 265 16 14491 51 66810 28 53

Colombia 314 20 6405 45 295380 42 139

Mexico 1102 19 8466 23 1925 57 56

Peru 214 30 6746 25 330 33 167

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Geographical MampA activity

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America 3683

North America 1064

Europe 915

Asia-Pacific 346 AfricaMiddle

East 6391 66 57 40 37

Australia Japan China Hong Kong Singapore

Intra-regional deals drove most MampA activity North America and Europe lead the pack in inter-regional deals

Latin America

61

North America

15

Europe14

Asia-Pacific8

AfricaMiddle East2

Deal value = USD490billion

34 24 12 10 05

Qatar Israel Mauritius Utd ArabEm

South Africa

127 95 84 60 20

Hong Kong China Japan Singapore Australia

Deal volume = 6578

Top acquirer nations by deal value (2013-17) in USD billion9

Top acquirer nations by deal volume (2013-17)9

Refer to ldquoSourcesrdquo appendix for citations8

119 95 77 74 73

UnitedKingdom

Spain Italy Luxembourg France

1769

573 376 325 179

Brazil UnitedStates

Mexico Chile Bermuda

19 16 12 7 2

Utd ArabEm

Israel South Africa Qatar Mauritius

177 167 135 67 55

Spain UnitedKingdom

France Germany Netherlands

1725

742479 407 322

Brazil UnitedStates

Mexico Chile Canada

Region of 507 deals in not disclosed

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

030060090012001500

0

25

50

75

EampR CampIP TMT FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Investments may remain subdued in the short term owing to uncertainties around 2018 elections corruption scandals involving the president and rising public debt However the vast domestic market ample natural resources and attractive asset prices (owing to currency devaluation) may appeal to investors in the long term

Brazilrsquos political instability and weak macroeconomic fundamentals could hurt investment activity in the near-term

9

0

200

400

600

800

010203040506070

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume bull The Economist Intelligence Unit (EIU) predicts the Brazilian real would weaken to R40 USD10 by 2021 as the interest rate gap with the US narrows thus making Brazilian assets and companies more attractive to foreign investors1

bull Moreover investors continue to see long-term potential in Brazil as a result of its vast domestic consumer market and ample natural resources 1

bull GDP is expected to grow ~02 in 2017 and to grow ~2 in 2018 which will favor economy recovery and hence help strengthen MampA activity1

o The Central Bank of Brazil is expected to continue to reduce interest rates at a faster pace (currently at 1025) until it reaches 875 by 3Q17 which can contribute to a reduction in interest expenses of corporations and families therefore helping to generate more cash for investments and to reduce leverage1

o According to the EIU inflation has eased from 63 in 2016 standing currently at 45 and is expected to fall further to 4 by 2021 This will help improve consumer demand1

bull Retail financial services health care infrastructure and telecommunications will likely perform above the overall average in the long term as private consumption slowly picks up (from -42 of GDP in 2016 to -07 in 2017) thus favoring MampA deals in these sectors1

MampA unfavorable factors

MampA deals in Brazil 2013-179

MampA deals in Brazil by investor country and target industry (2013-17)9

bull Political instability is elevated as there is uncertainty around the upcoming presidential elections (October 2018) Also the current president Michel Temer faces corruption investigation This could negatively affect investor sentiment and could lead to substantial weakening of key proposed reforms primarily related to the pension system and labor market111

bull Services sector which constitutes 70 of GDP is unlikely to recover much growth in the medium-term resulting from challenges such as low productivity and skills shortage despite rising unemployment This may act as a hindrance to attract investors to this sector1

bull Weakening economic conditions rising fiscal deficit rising public debtGDP ratio (from 70 in 2016 to ~87 in 2020) and increasing unemployment (from 65 in 2014 to ~13 in 2017)are increasing the cost of finance for households12

United States United Kingdom Luxembourg

MampA favorable factors

0

500

1000

1500

2000

0306090

120150180

Brazil US UK Lux Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Brazil

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA in Latin America activity in 2016-17 continued to remain weak owing primarily to political instability challenging macroeconomic conditions and falling commodity prices Energy amp Resources (~USD67 billion) industry attracted the highest investments in 2016-17 because of the abundance of natural resources in the region Brazil witnessed the highest number of deals (923) and attracted significant investments (USD75 billion) driven mainly by its vast consumer base

3

Refer to ldquoSourcesrdquo appendix for citations

Executive summary

bull MampA activity in Latin America remained subdued in 2016-17 primarily as a result of weak economic growth Many of the Latin American countries are dependent on oil and gas and mining sector for growth Therefore weak oil and commodity markets have affected MampA activity in the region123456

bull Uncertainty over North American Free Trade Agreement (NAFTA) negotiations has adversely affected investor confidence in Mexico especially in the manufacturing sector as Mexico exports over 80 of its goods to the US7

bull Catastrophic floods in Peru led to a decline in local industrial activity and consumer demand affecting MampA activity in consumer facing sectors in the short term8

MampA trends in Latin America

bull Energy amp Resources (EampR) industry observed the highest MampA activity in 2016-17 with ~USD67 billion in deal value Ample reserves of oil and natural resources in the region lower valuation of oil and gas assets resulting from decline in oil prices government policies to promote renewable energy and reforms in the mining sector could attract large investments in Latin America and drive MampA activity139

bull The emerging middle class and vast domestic markets of Brazil and Mexico may drive MampA activity in consumer facing industries like Consumer and Industrial Products(CampIP) and Technology Media and Telecommunications (TMT)12

Industries

bull In 2016-17 the majority of MampA activity in the region was intra-regional with bigger economies such as Brazil and Mexico being top investors in the region9

bull North America (especially the United States) and Europe (countries such as United Kingdom and Spain) have led cross-border MampA activity in Latin America as companies from these economies look to capture investment opportunities in developing markets9

Geographiesbull Despite the government implementing reforms weak

macroeconomic conditions overdependence on commodities for growth and falling oil and commodity prices continue to negatively impact the MampA activity in Latin America 123456

bull Political uncertainty owing to impending elections insufficient infrastructure rising inflation and growing corruption could affect investor investments and reduce MampA activity 123456

Challenges

2017 includes data from January 1 2017 to May 31 2017Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America MampA deal inflow totaled 2019 deals worth USD1259 billion between January 1 2016 and May 31 2017

2016-2017 MampA snapshot9

4

Value (USD bn) Volume of deals

Top Investor

Companies

$21

3

$9

5

$9

101

$5

1Vale SA

$6

1

State Grid Brazil Power

Nova Infraestrutura

FIPInvestor Group

Sompo Japan Nipponkoa Ins

Inc

Top InvestorCountries

$58

565

$14

225

$8

140

$6

14

Brazil$7

112

United States JapanMexico Canada

Top TargetIndustries

$67

447

$32

810

$21

361

$1

139

Energy and Resources $6

261

Consumer amp Industrial Products

Life Sciences amp HealthCare

Financial Services

Technology Media Telecom

Top DestinationCountries

$75

923

$11

34

$11

189

$7

171

Brazil$8

253

Bermuda ArgentinaChile Mexico

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Top deals in 2016-20179

5Refer to ldquoSourcesrdquo appendix for citations

Target Target industry Acquirer Acquirer industryValue of

transaction (in USD million)

Valepar SA Energy and Resources (EampR) Vale SA Energy and Resources

(EampR) 20957

Endurance Specialty Holdings

Financial Services Industry (FSI)

Sompo Japan Nipponkoa Ins Inc

Financial Services Industry (FSI) 6300

Nova Transportadora do Sudeste

Energy and Resources(EampR) Nova Infraestrutura FIP Financial Services

Industry (FSI) 5190

CPFL Energia SA Energy and Resources (EampR) State Grid Brazil Power Energy and Resources

(EampR) 3659

Ironshore Inc Financial Services Industry (FSI)

Liberty Mutual Insurance Co

Financial Services Industry (FSI) 2935

Vale Fertilizantes SAConsumer andIndustrial Products(CampIP)

The Mosaic CoConsumer andIndustrial Products(CampIP)

2760

Petrobras-Block BM-S-8

Energy and Resources (EampR)

Statoil Brasil Oleo e Gas Ltda

Energy and Resources (EampR) 2500

Petrobras-Certain Assets

Energy and Resources (EampR) Total SA Energy and Resources

(EampR) 2225

XP Holding Investimentos SA

Financial Services Industry (FSI) Itau Unibanco SA Financial Services

Industry (FSI) 1989

Isagen SA ESP Energy and Resources (EampR) Investor Group Financial Services

Industry (FSI) 1978

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Macroeconomic indicators10

6

2017 macroeconomic indicators (forecast)

Country

Nominal GDP (USD

billion)

Real GDP change

per annum

()

GDP per head(USD)

Inward FDI flowGDP ()

Exchange rate LCUUSD

Consumerprices

( change per annum)

Lending interest

rate ()

Argentina 646 25 14592 19 1636 262 245

Brazil 2039 05 9817 32 325 40 485

Chile 265 16 14491 51 66810 28 53

Colombia 314 20 6405 45 295380 42 139

Mexico 1102 19 8466 23 1925 57 56

Peru 214 30 6746 25 330 33 167

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Geographical MampA activity

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America 3683

North America 1064

Europe 915

Asia-Pacific 346 AfricaMiddle

East 6391 66 57 40 37

Australia Japan China Hong Kong Singapore

Intra-regional deals drove most MampA activity North America and Europe lead the pack in inter-regional deals

Latin America

61

North America

15

Europe14

Asia-Pacific8

AfricaMiddle East2

Deal value = USD490billion

34 24 12 10 05

Qatar Israel Mauritius Utd ArabEm

South Africa

127 95 84 60 20

Hong Kong China Japan Singapore Australia

Deal volume = 6578

Top acquirer nations by deal value (2013-17) in USD billion9

Top acquirer nations by deal volume (2013-17)9

Refer to ldquoSourcesrdquo appendix for citations8

119 95 77 74 73

UnitedKingdom

Spain Italy Luxembourg France

1769

573 376 325 179

Brazil UnitedStates

Mexico Chile Bermuda

19 16 12 7 2

Utd ArabEm

Israel South Africa Qatar Mauritius

177 167 135 67 55

Spain UnitedKingdom

France Germany Netherlands

1725

742479 407 322

Brazil UnitedStates

Mexico Chile Canada

Region of 507 deals in not disclosed

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

030060090012001500

0

25

50

75

EampR CampIP TMT FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Investments may remain subdued in the short term owing to uncertainties around 2018 elections corruption scandals involving the president and rising public debt However the vast domestic market ample natural resources and attractive asset prices (owing to currency devaluation) may appeal to investors in the long term

Brazilrsquos political instability and weak macroeconomic fundamentals could hurt investment activity in the near-term

9

0

200

400

600

800

010203040506070

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume bull The Economist Intelligence Unit (EIU) predicts the Brazilian real would weaken to R40 USD10 by 2021 as the interest rate gap with the US narrows thus making Brazilian assets and companies more attractive to foreign investors1

bull Moreover investors continue to see long-term potential in Brazil as a result of its vast domestic consumer market and ample natural resources 1

bull GDP is expected to grow ~02 in 2017 and to grow ~2 in 2018 which will favor economy recovery and hence help strengthen MampA activity1

o The Central Bank of Brazil is expected to continue to reduce interest rates at a faster pace (currently at 1025) until it reaches 875 by 3Q17 which can contribute to a reduction in interest expenses of corporations and families therefore helping to generate more cash for investments and to reduce leverage1

o According to the EIU inflation has eased from 63 in 2016 standing currently at 45 and is expected to fall further to 4 by 2021 This will help improve consumer demand1

bull Retail financial services health care infrastructure and telecommunications will likely perform above the overall average in the long term as private consumption slowly picks up (from -42 of GDP in 2016 to -07 in 2017) thus favoring MampA deals in these sectors1

MampA unfavorable factors

MampA deals in Brazil 2013-179

MampA deals in Brazil by investor country and target industry (2013-17)9

bull Political instability is elevated as there is uncertainty around the upcoming presidential elections (October 2018) Also the current president Michel Temer faces corruption investigation This could negatively affect investor sentiment and could lead to substantial weakening of key proposed reforms primarily related to the pension system and labor market111

bull Services sector which constitutes 70 of GDP is unlikely to recover much growth in the medium-term resulting from challenges such as low productivity and skills shortage despite rising unemployment This may act as a hindrance to attract investors to this sector1

bull Weakening economic conditions rising fiscal deficit rising public debtGDP ratio (from 70 in 2016 to ~87 in 2020) and increasing unemployment (from 65 in 2014 to ~13 in 2017)are increasing the cost of finance for households12

United States United Kingdom Luxembourg

MampA favorable factors

0

500

1000

1500

2000

0306090

120150180

Brazil US UK Lux Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Brazil

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America MampA deal inflow totaled 2019 deals worth USD1259 billion between January 1 2016 and May 31 2017

2016-2017 MampA snapshot9

4

Value (USD bn) Volume of deals

Top Investor

Companies

$21

3

$9

5

$9

101

$5

1Vale SA

$6

1

State Grid Brazil Power

Nova Infraestrutura

FIPInvestor Group

Sompo Japan Nipponkoa Ins

Inc

Top InvestorCountries

$58

565

$14

225

$8

140

$6

14

Brazil$7

112

United States JapanMexico Canada

Top TargetIndustries

$67

447

$32

810

$21

361

$1

139

Energy and Resources $6

261

Consumer amp Industrial Products

Life Sciences amp HealthCare

Financial Services

Technology Media Telecom

Top DestinationCountries

$75

923

$11

34

$11

189

$7

171

Brazil$8

253

Bermuda ArgentinaChile Mexico

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Top deals in 2016-20179

5Refer to ldquoSourcesrdquo appendix for citations

Target Target industry Acquirer Acquirer industryValue of

transaction (in USD million)

Valepar SA Energy and Resources (EampR) Vale SA Energy and Resources

(EampR) 20957

Endurance Specialty Holdings

Financial Services Industry (FSI)

Sompo Japan Nipponkoa Ins Inc

Financial Services Industry (FSI) 6300

Nova Transportadora do Sudeste

Energy and Resources(EampR) Nova Infraestrutura FIP Financial Services

Industry (FSI) 5190

CPFL Energia SA Energy and Resources (EampR) State Grid Brazil Power Energy and Resources

(EampR) 3659

Ironshore Inc Financial Services Industry (FSI)

Liberty Mutual Insurance Co

Financial Services Industry (FSI) 2935

Vale Fertilizantes SAConsumer andIndustrial Products(CampIP)

The Mosaic CoConsumer andIndustrial Products(CampIP)

2760

Petrobras-Block BM-S-8

Energy and Resources (EampR)

Statoil Brasil Oleo e Gas Ltda

Energy and Resources (EampR) 2500

Petrobras-Certain Assets

Energy and Resources (EampR) Total SA Energy and Resources

(EampR) 2225

XP Holding Investimentos SA

Financial Services Industry (FSI) Itau Unibanco SA Financial Services

Industry (FSI) 1989

Isagen SA ESP Energy and Resources (EampR) Investor Group Financial Services

Industry (FSI) 1978

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Macroeconomic indicators10

6

2017 macroeconomic indicators (forecast)

Country

Nominal GDP (USD

billion)

Real GDP change

per annum

()

GDP per head(USD)

Inward FDI flowGDP ()

Exchange rate LCUUSD

Consumerprices

( change per annum)

Lending interest

rate ()

Argentina 646 25 14592 19 1636 262 245

Brazil 2039 05 9817 32 325 40 485

Chile 265 16 14491 51 66810 28 53

Colombia 314 20 6405 45 295380 42 139

Mexico 1102 19 8466 23 1925 57 56

Peru 214 30 6746 25 330 33 167

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Geographical MampA activity

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America 3683

North America 1064

Europe 915

Asia-Pacific 346 AfricaMiddle

East 6391 66 57 40 37

Australia Japan China Hong Kong Singapore

Intra-regional deals drove most MampA activity North America and Europe lead the pack in inter-regional deals

Latin America

61

North America

15

Europe14

Asia-Pacific8

AfricaMiddle East2

Deal value = USD490billion

34 24 12 10 05

Qatar Israel Mauritius Utd ArabEm

South Africa

127 95 84 60 20

Hong Kong China Japan Singapore Australia

Deal volume = 6578

Top acquirer nations by deal value (2013-17) in USD billion9

Top acquirer nations by deal volume (2013-17)9

Refer to ldquoSourcesrdquo appendix for citations8

119 95 77 74 73

UnitedKingdom

Spain Italy Luxembourg France

1769

573 376 325 179

Brazil UnitedStates

Mexico Chile Bermuda

19 16 12 7 2

Utd ArabEm

Israel South Africa Qatar Mauritius

177 167 135 67 55

Spain UnitedKingdom

France Germany Netherlands

1725

742479 407 322

Brazil UnitedStates

Mexico Chile Canada

Region of 507 deals in not disclosed

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

030060090012001500

0

25

50

75

EampR CampIP TMT FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Investments may remain subdued in the short term owing to uncertainties around 2018 elections corruption scandals involving the president and rising public debt However the vast domestic market ample natural resources and attractive asset prices (owing to currency devaluation) may appeal to investors in the long term

Brazilrsquos political instability and weak macroeconomic fundamentals could hurt investment activity in the near-term

9

0

200

400

600

800

010203040506070

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume bull The Economist Intelligence Unit (EIU) predicts the Brazilian real would weaken to R40 USD10 by 2021 as the interest rate gap with the US narrows thus making Brazilian assets and companies more attractive to foreign investors1

bull Moreover investors continue to see long-term potential in Brazil as a result of its vast domestic consumer market and ample natural resources 1

bull GDP is expected to grow ~02 in 2017 and to grow ~2 in 2018 which will favor economy recovery and hence help strengthen MampA activity1

o The Central Bank of Brazil is expected to continue to reduce interest rates at a faster pace (currently at 1025) until it reaches 875 by 3Q17 which can contribute to a reduction in interest expenses of corporations and families therefore helping to generate more cash for investments and to reduce leverage1

o According to the EIU inflation has eased from 63 in 2016 standing currently at 45 and is expected to fall further to 4 by 2021 This will help improve consumer demand1

bull Retail financial services health care infrastructure and telecommunications will likely perform above the overall average in the long term as private consumption slowly picks up (from -42 of GDP in 2016 to -07 in 2017) thus favoring MampA deals in these sectors1

MampA unfavorable factors

MampA deals in Brazil 2013-179

MampA deals in Brazil by investor country and target industry (2013-17)9

bull Political instability is elevated as there is uncertainty around the upcoming presidential elections (October 2018) Also the current president Michel Temer faces corruption investigation This could negatively affect investor sentiment and could lead to substantial weakening of key proposed reforms primarily related to the pension system and labor market111

bull Services sector which constitutes 70 of GDP is unlikely to recover much growth in the medium-term resulting from challenges such as low productivity and skills shortage despite rising unemployment This may act as a hindrance to attract investors to this sector1

bull Weakening economic conditions rising fiscal deficit rising public debtGDP ratio (from 70 in 2016 to ~87 in 2020) and increasing unemployment (from 65 in 2014 to ~13 in 2017)are increasing the cost of finance for households12

United States United Kingdom Luxembourg

MampA favorable factors

0

500

1000

1500

2000

0306090

120150180

Brazil US UK Lux Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Brazil

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Top deals in 2016-20179

5Refer to ldquoSourcesrdquo appendix for citations

Target Target industry Acquirer Acquirer industryValue of

transaction (in USD million)

Valepar SA Energy and Resources (EampR) Vale SA Energy and Resources

(EampR) 20957

Endurance Specialty Holdings

Financial Services Industry (FSI)

Sompo Japan Nipponkoa Ins Inc

Financial Services Industry (FSI) 6300

Nova Transportadora do Sudeste

Energy and Resources(EampR) Nova Infraestrutura FIP Financial Services

Industry (FSI) 5190

CPFL Energia SA Energy and Resources (EampR) State Grid Brazil Power Energy and Resources

(EampR) 3659

Ironshore Inc Financial Services Industry (FSI)

Liberty Mutual Insurance Co

Financial Services Industry (FSI) 2935

Vale Fertilizantes SAConsumer andIndustrial Products(CampIP)

The Mosaic CoConsumer andIndustrial Products(CampIP)

2760

Petrobras-Block BM-S-8

Energy and Resources (EampR)

Statoil Brasil Oleo e Gas Ltda

Energy and Resources (EampR) 2500

Petrobras-Certain Assets

Energy and Resources (EampR) Total SA Energy and Resources

(EampR) 2225

XP Holding Investimentos SA

Financial Services Industry (FSI) Itau Unibanco SA Financial Services

Industry (FSI) 1989

Isagen SA ESP Energy and Resources (EampR) Investor Group Financial Services

Industry (FSI) 1978

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Macroeconomic indicators10

6

2017 macroeconomic indicators (forecast)

Country

Nominal GDP (USD

billion)

Real GDP change

per annum

()

GDP per head(USD)

Inward FDI flowGDP ()

Exchange rate LCUUSD

Consumerprices

( change per annum)

Lending interest

rate ()

Argentina 646 25 14592 19 1636 262 245

Brazil 2039 05 9817 32 325 40 485

Chile 265 16 14491 51 66810 28 53

Colombia 314 20 6405 45 295380 42 139

Mexico 1102 19 8466 23 1925 57 56

Peru 214 30 6746 25 330 33 167

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Geographical MampA activity

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America 3683

North America 1064

Europe 915

Asia-Pacific 346 AfricaMiddle

East 6391 66 57 40 37

Australia Japan China Hong Kong Singapore

Intra-regional deals drove most MampA activity North America and Europe lead the pack in inter-regional deals

Latin America

61

North America

15

Europe14

Asia-Pacific8

AfricaMiddle East2

Deal value = USD490billion

34 24 12 10 05

Qatar Israel Mauritius Utd ArabEm

South Africa

127 95 84 60 20

Hong Kong China Japan Singapore Australia

Deal volume = 6578

Top acquirer nations by deal value (2013-17) in USD billion9

Top acquirer nations by deal volume (2013-17)9

Refer to ldquoSourcesrdquo appendix for citations8

119 95 77 74 73

UnitedKingdom

Spain Italy Luxembourg France

1769

573 376 325 179

Brazil UnitedStates

Mexico Chile Bermuda

19 16 12 7 2

Utd ArabEm

Israel South Africa Qatar Mauritius

177 167 135 67 55

Spain UnitedKingdom

France Germany Netherlands

1725

742479 407 322

Brazil UnitedStates

Mexico Chile Canada

Region of 507 deals in not disclosed

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

030060090012001500

0

25

50

75

EampR CampIP TMT FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Investments may remain subdued in the short term owing to uncertainties around 2018 elections corruption scandals involving the president and rising public debt However the vast domestic market ample natural resources and attractive asset prices (owing to currency devaluation) may appeal to investors in the long term

Brazilrsquos political instability and weak macroeconomic fundamentals could hurt investment activity in the near-term

9

0

200

400

600

800

010203040506070

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume bull The Economist Intelligence Unit (EIU) predicts the Brazilian real would weaken to R40 USD10 by 2021 as the interest rate gap with the US narrows thus making Brazilian assets and companies more attractive to foreign investors1

bull Moreover investors continue to see long-term potential in Brazil as a result of its vast domestic consumer market and ample natural resources 1

bull GDP is expected to grow ~02 in 2017 and to grow ~2 in 2018 which will favor economy recovery and hence help strengthen MampA activity1

o The Central Bank of Brazil is expected to continue to reduce interest rates at a faster pace (currently at 1025) until it reaches 875 by 3Q17 which can contribute to a reduction in interest expenses of corporations and families therefore helping to generate more cash for investments and to reduce leverage1

o According to the EIU inflation has eased from 63 in 2016 standing currently at 45 and is expected to fall further to 4 by 2021 This will help improve consumer demand1

bull Retail financial services health care infrastructure and telecommunications will likely perform above the overall average in the long term as private consumption slowly picks up (from -42 of GDP in 2016 to -07 in 2017) thus favoring MampA deals in these sectors1

MampA unfavorable factors

MampA deals in Brazil 2013-179

MampA deals in Brazil by investor country and target industry (2013-17)9

bull Political instability is elevated as there is uncertainty around the upcoming presidential elections (October 2018) Also the current president Michel Temer faces corruption investigation This could negatively affect investor sentiment and could lead to substantial weakening of key proposed reforms primarily related to the pension system and labor market111

bull Services sector which constitutes 70 of GDP is unlikely to recover much growth in the medium-term resulting from challenges such as low productivity and skills shortage despite rising unemployment This may act as a hindrance to attract investors to this sector1

bull Weakening economic conditions rising fiscal deficit rising public debtGDP ratio (from 70 in 2016 to ~87 in 2020) and increasing unemployment (from 65 in 2014 to ~13 in 2017)are increasing the cost of finance for households12

United States United Kingdom Luxembourg

MampA favorable factors

0

500

1000

1500

2000

0306090

120150180

Brazil US UK Lux Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Brazil

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Macroeconomic indicators10

6

2017 macroeconomic indicators (forecast)

Country

Nominal GDP (USD

billion)

Real GDP change

per annum

()

GDP per head(USD)

Inward FDI flowGDP ()

Exchange rate LCUUSD

Consumerprices

( change per annum)

Lending interest

rate ()

Argentina 646 25 14592 19 1636 262 245

Brazil 2039 05 9817 32 325 40 485

Chile 265 16 14491 51 66810 28 53

Colombia 314 20 6405 45 295380 42 139

Mexico 1102 19 8466 23 1925 57 56

Peru 214 30 6746 25 330 33 167

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Geographical MampA activity

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America 3683

North America 1064

Europe 915

Asia-Pacific 346 AfricaMiddle

East 6391 66 57 40 37

Australia Japan China Hong Kong Singapore

Intra-regional deals drove most MampA activity North America and Europe lead the pack in inter-regional deals

Latin America

61

North America

15

Europe14

Asia-Pacific8

AfricaMiddle East2

Deal value = USD490billion

34 24 12 10 05

Qatar Israel Mauritius Utd ArabEm

South Africa

127 95 84 60 20

Hong Kong China Japan Singapore Australia

Deal volume = 6578

Top acquirer nations by deal value (2013-17) in USD billion9

Top acquirer nations by deal volume (2013-17)9

Refer to ldquoSourcesrdquo appendix for citations8

119 95 77 74 73

UnitedKingdom

Spain Italy Luxembourg France

1769

573 376 325 179

Brazil UnitedStates

Mexico Chile Bermuda

19 16 12 7 2

Utd ArabEm

Israel South Africa Qatar Mauritius

177 167 135 67 55

Spain UnitedKingdom

France Germany Netherlands

1725

742479 407 322

Brazil UnitedStates

Mexico Chile Canada

Region of 507 deals in not disclosed

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

030060090012001500

0

25

50

75

EampR CampIP TMT FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Investments may remain subdued in the short term owing to uncertainties around 2018 elections corruption scandals involving the president and rising public debt However the vast domestic market ample natural resources and attractive asset prices (owing to currency devaluation) may appeal to investors in the long term

Brazilrsquos political instability and weak macroeconomic fundamentals could hurt investment activity in the near-term

9

0

200

400

600

800

010203040506070

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume bull The Economist Intelligence Unit (EIU) predicts the Brazilian real would weaken to R40 USD10 by 2021 as the interest rate gap with the US narrows thus making Brazilian assets and companies more attractive to foreign investors1

bull Moreover investors continue to see long-term potential in Brazil as a result of its vast domestic consumer market and ample natural resources 1

bull GDP is expected to grow ~02 in 2017 and to grow ~2 in 2018 which will favor economy recovery and hence help strengthen MampA activity1

o The Central Bank of Brazil is expected to continue to reduce interest rates at a faster pace (currently at 1025) until it reaches 875 by 3Q17 which can contribute to a reduction in interest expenses of corporations and families therefore helping to generate more cash for investments and to reduce leverage1

o According to the EIU inflation has eased from 63 in 2016 standing currently at 45 and is expected to fall further to 4 by 2021 This will help improve consumer demand1

bull Retail financial services health care infrastructure and telecommunications will likely perform above the overall average in the long term as private consumption slowly picks up (from -42 of GDP in 2016 to -07 in 2017) thus favoring MampA deals in these sectors1

MampA unfavorable factors

MampA deals in Brazil 2013-179

MampA deals in Brazil by investor country and target industry (2013-17)9

bull Political instability is elevated as there is uncertainty around the upcoming presidential elections (October 2018) Also the current president Michel Temer faces corruption investigation This could negatively affect investor sentiment and could lead to substantial weakening of key proposed reforms primarily related to the pension system and labor market111

bull Services sector which constitutes 70 of GDP is unlikely to recover much growth in the medium-term resulting from challenges such as low productivity and skills shortage despite rising unemployment This may act as a hindrance to attract investors to this sector1

bull Weakening economic conditions rising fiscal deficit rising public debtGDP ratio (from 70 in 2016 to ~87 in 2020) and increasing unemployment (from 65 in 2014 to ~13 in 2017)are increasing the cost of finance for households12

United States United Kingdom Luxembourg

MampA favorable factors

0

500

1000

1500

2000

0306090

120150180

Brazil US UK Lux Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Brazil

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Geographical MampA activity

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America 3683

North America 1064

Europe 915

Asia-Pacific 346 AfricaMiddle

East 6391 66 57 40 37

Australia Japan China Hong Kong Singapore

Intra-regional deals drove most MampA activity North America and Europe lead the pack in inter-regional deals

Latin America

61

North America

15

Europe14

Asia-Pacific8

AfricaMiddle East2

Deal value = USD490billion

34 24 12 10 05

Qatar Israel Mauritius Utd ArabEm

South Africa

127 95 84 60 20

Hong Kong China Japan Singapore Australia

Deal volume = 6578

Top acquirer nations by deal value (2013-17) in USD billion9

Top acquirer nations by deal volume (2013-17)9

Refer to ldquoSourcesrdquo appendix for citations8

119 95 77 74 73

UnitedKingdom

Spain Italy Luxembourg France

1769

573 376 325 179

Brazil UnitedStates

Mexico Chile Bermuda

19 16 12 7 2

Utd ArabEm

Israel South Africa Qatar Mauritius

177 167 135 67 55

Spain UnitedKingdom

France Germany Netherlands

1725

742479 407 322

Brazil UnitedStates

Mexico Chile Canada

Region of 507 deals in not disclosed

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

030060090012001500

0

25

50

75

EampR CampIP TMT FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Investments may remain subdued in the short term owing to uncertainties around 2018 elections corruption scandals involving the president and rising public debt However the vast domestic market ample natural resources and attractive asset prices (owing to currency devaluation) may appeal to investors in the long term

Brazilrsquos political instability and weak macroeconomic fundamentals could hurt investment activity in the near-term

9

0

200

400

600

800

010203040506070

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume bull The Economist Intelligence Unit (EIU) predicts the Brazilian real would weaken to R40 USD10 by 2021 as the interest rate gap with the US narrows thus making Brazilian assets and companies more attractive to foreign investors1

bull Moreover investors continue to see long-term potential in Brazil as a result of its vast domestic consumer market and ample natural resources 1

bull GDP is expected to grow ~02 in 2017 and to grow ~2 in 2018 which will favor economy recovery and hence help strengthen MampA activity1

o The Central Bank of Brazil is expected to continue to reduce interest rates at a faster pace (currently at 1025) until it reaches 875 by 3Q17 which can contribute to a reduction in interest expenses of corporations and families therefore helping to generate more cash for investments and to reduce leverage1

o According to the EIU inflation has eased from 63 in 2016 standing currently at 45 and is expected to fall further to 4 by 2021 This will help improve consumer demand1

bull Retail financial services health care infrastructure and telecommunications will likely perform above the overall average in the long term as private consumption slowly picks up (from -42 of GDP in 2016 to -07 in 2017) thus favoring MampA deals in these sectors1

MampA unfavorable factors

MampA deals in Brazil 2013-179

MampA deals in Brazil by investor country and target industry (2013-17)9

bull Political instability is elevated as there is uncertainty around the upcoming presidential elections (October 2018) Also the current president Michel Temer faces corruption investigation This could negatively affect investor sentiment and could lead to substantial weakening of key proposed reforms primarily related to the pension system and labor market111

bull Services sector which constitutes 70 of GDP is unlikely to recover much growth in the medium-term resulting from challenges such as low productivity and skills shortage despite rising unemployment This may act as a hindrance to attract investors to this sector1

bull Weakening economic conditions rising fiscal deficit rising public debtGDP ratio (from 70 in 2016 to ~87 in 2020) and increasing unemployment (from 65 in 2014 to ~13 in 2017)are increasing the cost of finance for households12

United States United Kingdom Luxembourg

MampA favorable factors

0

500

1000

1500

2000

0306090

120150180

Brazil US UK Lux Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Brazil

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Latin America 3683

North America 1064

Europe 915

Asia-Pacific 346 AfricaMiddle

East 6391 66 57 40 37

Australia Japan China Hong Kong Singapore

Intra-regional deals drove most MampA activity North America and Europe lead the pack in inter-regional deals

Latin America

61

North America

15

Europe14

Asia-Pacific8

AfricaMiddle East2

Deal value = USD490billion

34 24 12 10 05

Qatar Israel Mauritius Utd ArabEm

South Africa

127 95 84 60 20

Hong Kong China Japan Singapore Australia

Deal volume = 6578

Top acquirer nations by deal value (2013-17) in USD billion9

Top acquirer nations by deal volume (2013-17)9

Refer to ldquoSourcesrdquo appendix for citations8

119 95 77 74 73

UnitedKingdom

Spain Italy Luxembourg France

1769

573 376 325 179

Brazil UnitedStates

Mexico Chile Bermuda

19 16 12 7 2

Utd ArabEm

Israel South Africa Qatar Mauritius

177 167 135 67 55

Spain UnitedKingdom

France Germany Netherlands

1725

742479 407 322

Brazil UnitedStates

Mexico Chile Canada

Region of 507 deals in not disclosed

Click for contents page2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

030060090012001500

0

25

50

75

EampR CampIP TMT FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Investments may remain subdued in the short term owing to uncertainties around 2018 elections corruption scandals involving the president and rising public debt However the vast domestic market ample natural resources and attractive asset prices (owing to currency devaluation) may appeal to investors in the long term

Brazilrsquos political instability and weak macroeconomic fundamentals could hurt investment activity in the near-term

9

0

200

400

600

800

010203040506070

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume bull The Economist Intelligence Unit (EIU) predicts the Brazilian real would weaken to R40 USD10 by 2021 as the interest rate gap with the US narrows thus making Brazilian assets and companies more attractive to foreign investors1

bull Moreover investors continue to see long-term potential in Brazil as a result of its vast domestic consumer market and ample natural resources 1

bull GDP is expected to grow ~02 in 2017 and to grow ~2 in 2018 which will favor economy recovery and hence help strengthen MampA activity1

o The Central Bank of Brazil is expected to continue to reduce interest rates at a faster pace (currently at 1025) until it reaches 875 by 3Q17 which can contribute to a reduction in interest expenses of corporations and families therefore helping to generate more cash for investments and to reduce leverage1

o According to the EIU inflation has eased from 63 in 2016 standing currently at 45 and is expected to fall further to 4 by 2021 This will help improve consumer demand1

bull Retail financial services health care infrastructure and telecommunications will likely perform above the overall average in the long term as private consumption slowly picks up (from -42 of GDP in 2016 to -07 in 2017) thus favoring MampA deals in these sectors1

MampA unfavorable factors

MampA deals in Brazil 2013-179

MampA deals in Brazil by investor country and target industry (2013-17)9

bull Political instability is elevated as there is uncertainty around the upcoming presidential elections (October 2018) Also the current president Michel Temer faces corruption investigation This could negatively affect investor sentiment and could lead to substantial weakening of key proposed reforms primarily related to the pension system and labor market111

bull Services sector which constitutes 70 of GDP is unlikely to recover much growth in the medium-term resulting from challenges such as low productivity and skills shortage despite rising unemployment This may act as a hindrance to attract investors to this sector1

bull Weakening economic conditions rising fiscal deficit rising public debtGDP ratio (from 70 in 2016 to ~87 in 2020) and increasing unemployment (from 65 in 2014 to ~13 in 2017)are increasing the cost of finance for households12

United States United Kingdom Luxembourg

MampA favorable factors

0

500

1000

1500

2000

0306090

120150180

Brazil US UK Lux Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Brazil

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

030060090012001500

0

25

50

75

EampR CampIP TMT FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Investments may remain subdued in the short term owing to uncertainties around 2018 elections corruption scandals involving the president and rising public debt However the vast domestic market ample natural resources and attractive asset prices (owing to currency devaluation) may appeal to investors in the long term

Brazilrsquos political instability and weak macroeconomic fundamentals could hurt investment activity in the near-term

9

0

200

400

600

800

010203040506070

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume bull The Economist Intelligence Unit (EIU) predicts the Brazilian real would weaken to R40 USD10 by 2021 as the interest rate gap with the US narrows thus making Brazilian assets and companies more attractive to foreign investors1

bull Moreover investors continue to see long-term potential in Brazil as a result of its vast domestic consumer market and ample natural resources 1

bull GDP is expected to grow ~02 in 2017 and to grow ~2 in 2018 which will favor economy recovery and hence help strengthen MampA activity1

o The Central Bank of Brazil is expected to continue to reduce interest rates at a faster pace (currently at 1025) until it reaches 875 by 3Q17 which can contribute to a reduction in interest expenses of corporations and families therefore helping to generate more cash for investments and to reduce leverage1

o According to the EIU inflation has eased from 63 in 2016 standing currently at 45 and is expected to fall further to 4 by 2021 This will help improve consumer demand1

bull Retail financial services health care infrastructure and telecommunications will likely perform above the overall average in the long term as private consumption slowly picks up (from -42 of GDP in 2016 to -07 in 2017) thus favoring MampA deals in these sectors1

MampA unfavorable factors

MampA deals in Brazil 2013-179

MampA deals in Brazil by investor country and target industry (2013-17)9

bull Political instability is elevated as there is uncertainty around the upcoming presidential elections (October 2018) Also the current president Michel Temer faces corruption investigation This could negatively affect investor sentiment and could lead to substantial weakening of key proposed reforms primarily related to the pension system and labor market111

bull Services sector which constitutes 70 of GDP is unlikely to recover much growth in the medium-term resulting from challenges such as low productivity and skills shortage despite rising unemployment This may act as a hindrance to attract investors to this sector1

bull Weakening economic conditions rising fiscal deficit rising public debtGDP ratio (from 70 in 2016 to ~87 in 2020) and increasing unemployment (from 65 in 2014 to ~13 in 2017)are increasing the cost of finance for households12

United States United Kingdom Luxembourg

MampA favorable factors

0

500

1000

1500

2000

0306090

120150180

Brazil US UK Lux Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Brazil

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

070140210280350

010203040

CampIP FSI TMT EampR LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Ambiguity around the North American Free Trade Agreement (NAFTA) negotiation contributes to lower economic growth and impacts investor sentiments in the short term However Mexicorsquos energy sector (Oil amp Gas and Renewables) and export oriented manufacturing sector portray a potentially positive outlook in the long term owing to resource availability and lower wage costs

Investments in Mexico are affected in the short term because of uncertainties around US administration protectionist trade policies

10

050100150200250

0

10

20

30

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Mexico 2013-179

MampA deals in Mexico by investor country and target industry (2013-17)9

bull The Mexican government is focused on implementing the structural reforms passed in 2013-2014 This can boost the Mexican energy (both upstream and downstream) sector thus helping to attract investors2

bull Considering the country has considerable deep-water oil reserves and shale potential the reforms in the energy sector can encourage foreign investment and bring new entrants into the market 2

bull Mexicorsquos renewable market is attractive and growing as a result of positive price dynamics and rising consumption demand13

o The government has plans to invest USD258mn in 10000 solar power systems 13

o BMI research has forecasted that the generation and capacity of non-hydropower renewables sector in 2017 will grow by 243 and 314 respectively13

o A decline in electricity prices and greater connectivity with the North American energy grid can also reduce input costs for businesses2

bull Export oriented manufacturing has a positive outlook in the long term as a result of low wages relatively skilled labor force and deep integration into the US value chains2

bull The timeline of NAFTA negotiations is unclear and has negatively affected investor sentiments Mexico has higher stake in NAFTA negotiations as it depends on the US for over 80 of its goods exports and has USD1212bn trade surplus with the US7

bull According to the EIU uncertainties over the US trade policies will contribute to weaken economic growth from 26 in 2015 to 19 in 20172

bull BMI research predicts that private consumption will slow to 24 y-o-y in 2017 down from 28 and 31 in 2016 and 2015 respectively owing to tightening credit conditions low confidence levels and increasing risk of the US protectionist trade measures14

bull Consumer price inflation has increased sharply in early 2017 Inflation is expected to rise from 28 average for 2016 to 46 average for 2017 mainly due to the liberalization of fuel prices which has resulted in rise of retail fuel prices by 14-20 during the first part of its implementation in January 2017 This might weaken investments in consumer facing sectors14

bull The peso is expected to weaken in 2017-19 as higher US interest rates strengthen the USD hence making it difficult to curb inflation and increasing the value of external debt (from 502 of GDP in 2016 to 55 of GDP by 2018) threatening MampA investments2

MampA unfavorable factors

MampA favorable factors

0

200

400

600

0

15

30

45

60

Mexico US Israel Canada Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

United States

Click for contents page

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0

10

20

30

EampR CampIP FSI LSHC TMT

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector and offer tax incentives for the renewables sector may boost MampA activity However weak economic growth (resulting from fall in copper prices and decline in demand from China) and ambiguity around upcoming presidential elections may restrict overall growth

Chilersquos strong business environment and rich natural resources may attract investments in renewable energy and mining sectors

0

50

100

150

200

0

5

10

15

20

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Chile 2013-179

MampA deals in Chile by investor country and target industry (2013-17)9

bull According to Global Competitiveness Report 2016-17 Chilersquos business environment is the strongest in Latin America (ranked 33 among 138 countries)15

o Strong economic fundamentals an open investment regime recovering private consumption and a large network of free-trade agreements are likely to help boost investment and support MampA activities in Chile3

o Moreover Chilersquos deep open financial system can support high debt and equity investment flows in the mid-term3

bull According to BMI research Chile is a regional outperformer in the renewables energy sector (Non-hydroelectric renewable capacity growth was 527 y-o-y in 2016 and 511 in 2017) Lower oil prices reduced regulation and likely tax incentives for renewables attract domestic and overseas firms to invest in this sector163

o The EIU predicts that the governmentrsquos target to draw 20 of energy requirements from renewable sources could be achieved by 2020 (115 in 2015)3

bull The governmentrsquos initiatives to reduce barriers to foreign investment in the mining sector could boost MampA activity in the long term As per industry projections private and public sector investments in the Chilean mining sector are expected to be close to USD28 billion between 2016 and 20241718

o Chile has vast reserves of lithium accounting for about 62 of the global market share Rising demand from the battery-powered automotive industry is expected to increase lithium demand and production which could attract investors18

bull Impending presidential elections in November 2017 may shake up the political scenario of Chile as it could delay clearances and approvals of MampA deals3

o Also weak economic growth resulting from low copper prices and voter fatigue arising from dramatic reforms may prevent the new government from taking radical steps The new government may likely focus on achieving modest improvements to the business environment3

bull Decline in demand from China (as a result of the slowest economy growth in seven years at 67 in 2016) and decline in copper prices (at a CAGR of -128 during 2014-2016) affected Chilean exports which fell by 89 y-o-y in 2016 This could restrict MampA activity in the country1920

MampA unfavorable factors

MampA favorable factors

Refer to ldquoSourcesrdquo appendix for citations

United States United Kingdom

11Click for contents page

Chile

2017 includes data from January 1 2017 to May 31 2017

070140210280350420

0

10

20

30

40

Chile Canada Colombia

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

US UK

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

0

50

100

150

0

5

10

15

EampR FSI CampIP TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

The peace deal with rebels could help improve the administration strengthen consumer confidence and boost private investment in the long term Recovery in oil prices infrastructure investment and rising domestic demand also support MampA activity However increasing taxes and higher wage costs could pose challenges in attracting investments

Colombiarsquos peace deal with the rebels and recovery in oil prices may help attract MampA activity in the long term

12

0

50

100

150

200

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Colombia 2013-179

MampA deals in Colombia by investor country and target industry (2013-17)9

bull In December 2016 the Colombian government signed a peace deal with revolutionary armed forces of Colombia (FARC) This deal may help strengthen security improve business environment and boost investments particularly in rural areas4

bull The governmentrsquos efforts to improve economic ties in the region through the Pacific Alliance and reinforcing ties with the network of Free Trade Agreements (FTAs) with the United States European Union and Asian countries could bolster trade4

bull Rising level of disposable income (from USD8830 per head in 2016 to USD12540 per head in 2020) increasing domestic demand and regulatory changes will likely help attract MampA activity in insurance consumer and retail sectors in the long term421

bull According to the EIU investment in infrastructure and private consumption growth (from 22 in 2017 to 39 in 2021) will help increase GDP growth from 2 in 2017 to 39 in 2019 This can help attract investors in the country4

bull BMI research estimates a negative outlook for Colombiarsquos oil and gas sector due to sustained oil price weakness (sharp decline from USD536 per barrel in 2015 to USD4513 per barrel in 2016) Owing to this private sector investors may turn away from Colombian markets in an effort to boost their core assets22

o US is the key export destination for Colombia but an increase in oil production in the US has reduced imports from Colombia in 20164

o China which is the second most important export destination has also reduced imports from Colombia owing to an economic slowdown4

bull A poor business environment in light of Colombiarsquos high wage and non-wage costs and insufficient infrastructure may limit MampA activity4

o Colombia ranks 84138 under the infrastructure pillar of Global competiveness report 2016-2017 much behind Brazil Mexico and Chile23

MampA unfavorable factors

MampA favorable factors

0

50

100

150

0

5

10

15

Col Canada HongKong

US France

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citations

Colombia United States

Click for contents page

Colombia

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

05

10152025

EampR CampIP FSI TMT LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Terrible floods that hit Peru during early 2017 resulted in business shutdowns and higher unemployment in the short term hindering investments Further declining copper prices and corruption scandals impacted investment activity in Peru However governmentrsquos efforts to create a business friendly environment are likely to help boost investments in the long term

Recent natural calamity (April 2017) has negatively affected investments in consumer facing and mining sectors in Peru

13

0

50

100

150

0

3

6

9

12

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Peru 2013-179

MampA deals in Peru by investor country and target industry (2013-17)9

The NetherlandsUnited States

bull Perursquos president Pedro Pablo Kuczynski plans to continue with the countryrsquos business-friendly policy framework during 2017 and 20215

o The current presidentrsquos regime is expected to boost infrastructure spending supporting the countryrsquos long term growth Peru maintains an investor-friendly tax regime as it derives most of its revenue(~50) from indirect taxes (VAT on domestic goods and services and VAT on imported goods) while corporate income tax contributes to only 217 of its revenue24

o Moreover the government has created new and lower tax brackets for small businesses and changed regulations to make registration of companies and the application of business licenses easier5

bull The currency is likely to depreciate slightly however strong foreign reserves and firm capital inflows could prevent a sharp decline This will maintain strong operating environment for the companies5

bull The EIU expects the FDI inflow to increase from USD6 billion in 2016 to USD9 billion in 20215

o Perursquos economy remains dominated by mining sector attracting foreign investments focusing on this sector5

bull Also recently the main productivity gains came from agro-industrial sector which may attract MampA activity5

bull Widespread flooding in Peru during MarchApril 2017 (among the worst to hit Peru in the last century) caused severe economic damage The impact includes business closures reduction in industrial activity and short term unemployment This has negatively affected the private consumption (from 34 in 2016 to 18 in 2017) which may result in low investments in the consumer facing and mining sectors in the short term25

bull The EIU predicts that Perursquos economic growth will be weaker during 2017-2021 than the average in the last decade because of lower commodity prices5

o Declining prices of commodities like copper in the international market and a slowdown in ChinandashPerursquos principal trading partner could hamper exports and affect the overall trade balance5

bull The Peruvian economy is negatively affected by a corruption scandal Construction of a natural gas pipeline connecting Perursquos southern coast with its neighbors awarded to a consortium headed by a Brazilian construction company was embroiled in corruption investigations This has stalled infrastructure projects in Peru and has shaken investor confidence5

o The irregularities in public expenditure projects have created an agitated political environment that translates to reduced investment and slower economic growth5

MampA unfavorable factors

MampA favorable factors

0

50

100

150

200

02468

HongKong

Peru Neth China US

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Peru

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

050100150200

0369

12

EampR TMT CampIP FSI LSHC

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Rich shale oil resources in Argentina combined with government efforts and positive pricing dynamics may support the growth of MampA activity in the country However weak demand from Argentinarsquos key trade partners like Brazil China and the US in 2018-2019 could constrain investment activity

Argentinarsquos shale oil resources and tax incentives for mined commodities could attract large investments in these sectors

14

0

50

100

150

02468

10

2013 2014 2015 2016 2017D

eal v

olu

mes

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

MampA deals in Argentina 2013-179

MampA deals in Argentina by investor country and target industry (2013-17)9

United StatesColombia

bull The government of Mauricio Macri is focused on implementing economic policy adjustments It is also trying to reduce economic instability and return the economy to sustainable growth6

o An easing of inflation combined with efforts by Macri government to address the problem of legal and regulatory uncertainty would help promote strong growth in fixed investment6

bull Agriculture growth has increased from -54 in 2016 to 6 in 2017 as a result of record agricultural harvests and infrastructure investments This could attract MampA activity in this sector6

bull Argentinarsquos oil and gas sector has an optimistic outlook due to a strong competitive landscape and supportive pricing dynamics6

o The Vaca Muerta shale formation in Argentinas Neuqueacuten Province has abundant hydrocarbon resources The formation is now considered to hold prospective resources of 212bn barrels of oil equivalent attracting investors26

o Moreover President Macri has reached an agreement with labor unions in January 2017 addressing their concerns and allowing for more flexible contracts that may support MampA activity27

bull In 2016 Argentina slashed export taxes for several mined commodities This is likely to help promote investment activity in this sector28

bull The dual effect of high inflation and subsidy cuts is harming consumer confidence This poses risks to the stability of the government6

bull The EIU predicts a positive GDP in 2017 after a negative 22 growth in 2016 However GDP growth is expected by the EIU to be limited to 25 in 2017 owing to Brazilrsquos political crisis affecting manufacturing exports in Argentina projected weakening of Chinese import demand and a cyclical downturn in the United Statesrsquo economy This may affect investor sentiments6

bull Private consumption may slow down in 2018-2019 (from 35 in 2018 to 26 in 2018) owing to slowdown in economy and increase in unemployment rate negatively affecting investments in consumer facing sectors6

bull According to the EIU the peso will continue to weaken in 2017-2021 hence potentially limiting large capital inflows6

MampA unfavorable factors

MampA favorable factors

050100150200250300

0

3

6

9

12

Argentina China Spain

Dea

l vol

um

es

Dea

l val

ue

in U

SD

b

illio

n

Value Volume

Refer to ldquoSourcesrdquo appendix for citationsClick for contents page

Argentina

2017 includes data from January 1 2017 to May 31 2017

US Col

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

MampA activity across industries

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Recent changes in regulatory policies of Latin American countries favoring the mining sector and expectations of improved returns from mined commodities like gold are likely to drive MampA activity in this sector The Latin American region holds 54 of the worldrsquos lithium resources and hence benefit from an increasing demand for lithium batteries which may further drive MampA deals2930

Deals in the Metals and Mining sector continue to drive MampA activity in the Energy and Resources (EampR) industry

16

Alternative Energy Sources

Oil amp Gas 24

Power 18

Metals amp Mining 44

6

of deals by top EampR sectors9

3045831102

38299 38498

28577

0

100

200

300

400

500

0

10000

20000

30000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

Brazil 17

7

Canada 17

Chile 7

of deals by top investor countries9

Mexico 13

Peru12

Brazil 28

Chile 11

of deals by top destination countries9

MampA Deals in EampR from 2013-179

EampR62

FSI32

CampIP5

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

EampR 112556 900FSI 51744 465

CampIP 1814 64

Others 1731 33

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Energy amp Resources

Argentina

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sales from Latin American FampB sector are expected to grow at 32 y-o-y in USD terms in 2017 Food spendingconsumption has gone up as a result of improving economic conditions like lower inflation in key markets like Brazil and Argentina rising disposable incomes and strengthening of local currencies against USD31

Increase in food spending has led Food amp Beverage (FampB) sector to dominate MampA activity in Consumer amp Industrial Products (CampIP) industry

17

12

10

19

6

of deals by top CampIP sectors9

40440

26106 28007 26302

5270

0

100

200

300

400

500

600

700

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in CampIP from 2013-179

CampIP60

FSI33

TMT3

Others4

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

CampIP 78303 1572FSI 41090 865TMT 700 86

Others 6033 116

Mexico 16

Chile 11

Brazil 44

Argentina 7

United States 13

Chile 7

Brazil 24

10 Professional Services

TransportationFampB

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Consumer amp Industrial Products

Hotels

Note CampIP includes Consumer Business (CB) and Manufacturing (MFG)

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

SoftwareIT consulting amp services

Additionally slower 3G4G subscription growth rate in 2017 (from 117 in 2016 to 111 in 2017) due to the high cost of ownership of devices services and content has hurt TMT deals in Latin America However Brazil and Mexico captured 71 of deals as these markets are scalable and consumers have a high tendency to adopt new technologies32

Economic slowdown and political instability in many countries drove a decline in Telecommunications Media Technology (TMT) MampA activity during 2014-2017

18

12

10

16

10

of deals by top TMT sectors9

15291

37576

10511

5462

2410

100

200

300

400

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in TMT from 2013-179

TMT62

FSI30

CampIP7

Others1

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

TMT 51836 600FSI 15584 291

CampIP 1598 62

Others 63 13

Mexico 10

Colombia6

Brazil 61

Argentina 5

United States 17

Spain4

Brazil 40

4 EducationalServices

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Click for contents page

Telecommunications Media Technology

United Kingdom

Advertising amp Marketing

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Non residential Banks

Other financials

Latin Americarsquos biggest insurance market Brazil witnessed 37 of deals resulting from long-term sector growth driven by continued expansion of Brazilrsquos middle class and growing retirement-age population 90 of the MampA activity in FSI was conducted by acquirers within the industry33

Having recorded a steady growth in MampA deal value during 2012-15 the Financial Services industry (FSI) slumped in 2016 due to weak economic growth in Latin America

19

18

14

18

11

of deals by top FSI sectors9

2977031527

36760

16044

4627

0

100

200

300

400

500

0

5000

10000

15000

20000

25000

30000

35000

40000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in FSI from 2013-179

FSI90

CampIP5

EampR2

Others3

MampA deals by acquirer industry from 2013-179

Industry Value of transaction (USD million) Number of transactions

FSI 109099 1060CampIP 7612 59

EampR 779 23

Others 1239 36

Mexico 14

Chile 10

Brazil 37

Peru 8

11

Chile 8

Brazil 27

United States 9

Insurance

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Mexico

Click for contents page

Financial Services Industry

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Hospitals

Rising disposable income weakening of the Brazilian Real higher public expenditure and international collaborations will continue to attract foreign multinationals to invest in Brazil But in Mexico (Latin Americarsquos second-largest LSHC market) the short-term outlook of the industry is expected to be negative due to continuous weakening of the peso in 2017 and regulatory challenges343536

Life Sciences and Healthcare (LSHC) industry portrays a mixed outlook in various countries in the region

20

26

23

28

19

of deals by top LSHC sectors9

2502

3886

2152

82779

0

20

40

60

80

100

120

0

2000

4000

6000

8000

2013 2014 2015 2016 2017

Dea

l vol

um

es

Dea

l val

ue

in U

SD

mill

ion

of deals by top investor countries9 of deals by top destination countries9

MampA Deals in LSHC from 2013-179

LSHC61

FSI32

CampIP5

Others2

MampA deals by acquirer industry from 2013-20179

Industry Value of transaction (USD million) Number of transactions

LSHC 5699 210FSI 3248 111

CampIP 482 15Others 17 8

Mexico 11

Chile 6

Brazil 60

Colombia 6

United States 13

France 4

Brazil 41

6

Pharma-ceuticals

Refer to ldquoSourcesrdquo appendix for citations

Value of deals Volume of deals

Healthcare Equipment amp Supplies

Healthcare Providers amp Services (HMOs)

Click for contents page

Life Sciences and Healthcare

Mexico

2017 includes data from January 1 2017 to May 31 2017

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Perspectives

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte produces original and informative articles drawn from experiences throughout our global network of member firms Listed below are recent pieces which provide insights for businesses about events and trends in the Americas region

Perspectives

22

Argentina - A Destination for Investment 37

A series of new government initiatives aim to make Argentina healthier and more open to foreign investors and MampA deal trends are slowly beginning to respond Learn how the opportunity to enter the market is still fresh and how we expect to see even greater interest emerge as the new administration implements its agenda

Mexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administration38

This report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and MampA Read more about the potential impact on Mexicorsquos key sectors including manufacturing agriculture energy telecommunications and financial services

In the wake of the Panama Papers A guide for multinational corporations39

The Panama Papers have brought business interactions with offshore holding companies to the forefront Learn how companies are assessing whether any corruption or fraud exists within their operations and how they can implement policies procedures and controls to mitigate risk

MampA trends report 2016 - Is last years record pace sustainable40

Coming off a record year for mergers and acquisitions (MampA) an overwhelming majority of executives at US corporations and private equity firms forecast that deal activity will stay strong or even ramp up What MampA trends are driving their optimism What factors could potentially put the brakes on Deloitte Advisoryrsquos third annual trends report asks MampA leaders for their predictions We surveyed nearly 2300 executives at US companies and private equity firms to gauge their expectations experiences and plans for mergers and acquisitions in the coming year While the sentiment and outlook for MampA activity remain favorable a number of potential obstacles emerged in our third annual MampA trends report

Wall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Deals41

Gain additional insights about how to address FCPA risks in this piece based on the article MampA in emerging markets A fresh look at successor liability associated with the Foreign Corrupt Practices Act

Human Capital Considerations in Cross-border Deals42

Acquiring an overseas company can open up new markets and business opportunities However foreign companies may also require a number of unique human capital considerations that can impact deal value Read more about the impact of these key human capital considerations

Acquisition Due Diligence Bribery amp Corruption Risk43

Buyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the targetrsquos performance key risks Learn more about how a buyerrsquos failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences

Market Consolidation Outlook ndash Investment strategies and merger amp acquisition activity44

Deloitte Brazil presents the results of its survey that tackles its challenging local MampA market The survey led by Deloitte Brazilrsquos Corporate Finance Advisory practice presents the opinions of top executives from 221 companies operating in several industry segments Read moreabout how MampAs have become an alternative to organic growth in Brazil the expectations for the MampA market in the next two years and experiences and challenges for closing deals in Brazil Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Leadership contacts

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Americas Region LeadershipndashMampA Transaction Services

24

Americas region Argentina Brazil Canada

Hernan Marambiohmarambioadeloittecom

Jose Velazjvelazdeloittecom

Daniel Vardedvardedeloittecom

Ronaldo Xavier rxavierdeloittecom

Mark Jamrozinskimjamrozinskideloitteca

Chile Colombia Mexico United States

Christopher Lyonclyondeloittecom

Javier Lanchojlanchodeloittecom

Guillermo Olguingolguindeloittemxcom

Russell Thomsonrthomsondeloittecom

Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Americas Region LeadershipndashMampA Transaction Services

24

Americas region Argentina Brazil Canada

Hernan Marambiohmarambioadeloittecom

Jose Velazjvelazdeloittecom

Daniel Vardedvardedeloittecom

Ronaldo Xavier rxavierdeloittecom

Mark Jamrozinskimjamrozinskideloitteca

Chile Colombia Mexico United States

Christopher Lyonclyondeloittecom

Javier Lanchojlanchodeloittecom

Guillermo Olguingolguindeloittemxcom

Russell Thomsonrthomsondeloittecom

Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Americas Region LeadershipndashCorporate Finance

25

Americas region Argentina Brazil Canada

Will Framewframedeloittecom

Marcos BazanmgbazanDELOITTEcom

Reinaldo Grassonrgoliveiradeloittecom

Robert Olsenrobolsendeloitteca

Chile Mexico United States

Jaime Retamaljaretamaldeloittecom

Mauricio Costemallemcostemalledeloittemxcom

Phil Colaco philcolacodeloittecom

Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Appendix

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sources (12)

27

1 The Economist Intelligence Unit Limited (2017) Brazil country report httpcountryeiucomBrazil Retrieved on July 5 2017 from Economist Intelligence Unit database

2 The Economist Intelligence Unit Limited (2017) Mexico country report httpcountryeiucomMexico Retrieved on July 5 2017 from Economist Intelligence Unit database

3 The Economist Intelligence Unit Limited (2017) Chile country report httpcountryeiucomChile Retrieved on July 5 2017 from Economist Intelligence Unit database

4 The Economist Intelligence Unit Limited (2017) Colombia country report httpcountryeiucomColombia Retrieved on July 5 2017 from Economist Intelligence Unit database

5 The Economist Intelligence Unit Limited (2017) Peru country report httpcountryeiucomPeru Retrieved on July 5 2017 from Economist Intelligence Unit database

6 The Economist Intelligence Unit Limited (2017) Argentina country report httpcountryeiucomArgentina Retrieved on July 5 2017 from Economist Intelligence Unit database

7 BMI Industry View - Consumer Outlook - Mexico - Q3 2017 June 22 2017 Accessed on July 4 20178 BMI Industry View - Consumer Outlook - Peru - Q3 2017 June 232017 Accessed on July 4 20179 Thomson Reuters (2016) MampA Overview httpmergersthomsonibcomNASAppDealSearchMAOverviewhtmExpressCode=DELOITTEDEALS Retrieved

on June 21 2016 from Thomson ONE database10 The Economist Intelligence Unit Limited (2017) Market indicators and forecasts

httpdataeiucomEIUTableViewaspxinitial=trueamppubtype_id=1303181315 Retrieved on June 19 2017 from Economist Intelligence Unit database11 BMI View - Brazil ndash Q4 2017 June 30 2017 Accessed on July 5 201712 The Economist Intelligence Unit Limited (2017) Brazil country forecast June 1 2017

httpwwweiucomindexasplayout=displayIssueArticleampissue_id=1325488916ampopt=full Retrieved on July 5 2017 from Economist Intelligence Unit database

13 BMI Industry View - Mexico - Q3 2017 June 192017 Accessed on July 4 201714 BMI Industry View - Consumer Outlook - Mexico - Q3 2017 June 222017 Accessed on July 4 201715 World Economic Forum The Global Competitiveness Report 2016-17 (2017) httpwww3weforumorgdocsGCR2016-

201705FullReportTheGlobalCompetitivenessReport2016-2017_FINALpdf Accessed on July 4 201716 BMI Industry View - Chile - Q3 2017 June 12 2017 Accessed on July 6 201717 ldquoChilean mining powerhouse looks to new options to emerge from global mining slumprdquo May 17 2016 httpwwwminingcomwebchilean-mining-

powerhouse-looks-to-new-options-to-emerge-from-global-mining-slump Accessed January 30 201718 ldquoChile - Mining Sectorrdquo October 25 2016 httpswwwexportgovarticleid=Chile-Mining-Sector Accessed on January 30 201719 ITC Trademap httpwwwtrademaporgProduct_SelCountry_TSaspxnvpm=1|152||||74|||4|1|1|2|2|1|1|1|1 Data retrieved on March 20 201720 ldquoChina slowdown not as bad as fearedrdquo July 15 2016 httpmoneycnncom20160714newseconomychina-gdp Accessed on March 20 201721 The Economist Intelligence Unit Limited (2017) Market indicators and forecasts httpdataeiucomEIUTableViewaspxinitial=trueamppubtype_id=0

Retrieved on July 7 201722 BMI Industry View - Colombia - Q3 2017 May 24 2017 Accessed on July 6 201723 BMI View - BMIView_container-Colombia-Economy-2017-02-16-15-27-18-036docm June 29 2017 Accessed on July 6 201724 BMI Fiscal And Debt Outlook - Peru - Q3 2017 June 15 2017 Accessed on July 7 201725 BMI Industry View - Consumer Outlook - Peru - Q3 2017 June 232017 Accessed on July 17 2017

Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sources (12)

27

1 The Economist Intelligence Unit Limited (2017) Brazil country report httpcountryeiucomBrazil Retrieved on July 5 2017 from Economist Intelligence Unit database

2 The Economist Intelligence Unit Limited (2017) Mexico country report httpcountryeiucomMexico Retrieved on July 5 2017 from Economist Intelligence Unit database

3 The Economist Intelligence Unit Limited (2017) Chile country report httpcountryeiucomChile Retrieved on July 5 2017 from Economist Intelligence Unit database

4 The Economist Intelligence Unit Limited (2017) Colombia country report httpcountryeiucomColombia Retrieved on July 5 2017 from Economist Intelligence Unit database

5 The Economist Intelligence Unit Limited (2017) Peru country report httpcountryeiucomPeru Retrieved on July 5 2017 from Economist Intelligence Unit database

6 The Economist Intelligence Unit Limited (2017) Argentina country report httpcountryeiucomArgentina Retrieved on July 5 2017 from Economist Intelligence Unit database

7 BMI Industry View - Consumer Outlook - Mexico - Q3 2017 June 22 2017 Accessed on July 4 20178 BMI Industry View - Consumer Outlook - Peru - Q3 2017 June 232017 Accessed on July 4 20179 Thomson Reuters (2016) MampA Overview httpmergersthomsonibcomNASAppDealSearchMAOverviewhtmExpressCode=DELOITTEDEALS Retrieved

on June 21 2016 from Thomson ONE database10 The Economist Intelligence Unit Limited (2017) Market indicators and forecasts

httpdataeiucomEIUTableViewaspxinitial=trueamppubtype_id=1303181315 Retrieved on June 19 2017 from Economist Intelligence Unit database11 BMI View - Brazil ndash Q4 2017 June 30 2017 Accessed on July 5 201712 The Economist Intelligence Unit Limited (2017) Brazil country forecast June 1 2017

httpwwweiucomindexasplayout=displayIssueArticleampissue_id=1325488916ampopt=full Retrieved on July 5 2017 from Economist Intelligence Unit database

13 BMI Industry View - Mexico - Q3 2017 June 192017 Accessed on July 4 201714 BMI Industry View - Consumer Outlook - Mexico - Q3 2017 June 222017 Accessed on July 4 201715 World Economic Forum The Global Competitiveness Report 2016-17 (2017) httpwww3weforumorgdocsGCR2016-

201705FullReportTheGlobalCompetitivenessReport2016-2017_FINALpdf Accessed on July 4 201716 BMI Industry View - Chile - Q3 2017 June 12 2017 Accessed on July 6 201717 ldquoChilean mining powerhouse looks to new options to emerge from global mining slumprdquo May 17 2016 httpwwwminingcomwebchilean-mining-

powerhouse-looks-to-new-options-to-emerge-from-global-mining-slump Accessed January 30 201718 ldquoChile - Mining Sectorrdquo October 25 2016 httpswwwexportgovarticleid=Chile-Mining-Sector Accessed on January 30 201719 ITC Trademap httpwwwtrademaporgProduct_SelCountry_TSaspxnvpm=1|152||||74|||4|1|1|2|2|1|1|1|1 Data retrieved on March 20 201720 ldquoChina slowdown not as bad as fearedrdquo July 15 2016 httpmoneycnncom20160714newseconomychina-gdp Accessed on March 20 201721 The Economist Intelligence Unit Limited (2017) Market indicators and forecasts httpdataeiucomEIUTableViewaspxinitial=trueamppubtype_id=0

Retrieved on July 7 201722 BMI Industry View - Colombia - Q3 2017 May 24 2017 Accessed on July 6 201723 BMI View - BMIView_container-Colombia-Economy-2017-02-16-15-27-18-036docm June 29 2017 Accessed on July 6 201724 BMI Fiscal And Debt Outlook - Peru - Q3 2017 June 15 2017 Accessed on July 7 201725 BMI Industry View - Consumer Outlook - Peru - Q3 2017 June 232017 Accessed on July 17 2017

Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Sources (22)

28

26 BMI SWOT - Argentina - Q3 2017 July 4 2017 Accessed on July 4 201727 BMI Industry View - Argentina - Q3 2017 July 4 2017 Accessed on July 4 201728 ldquoArgentina scraps mining export taxrdquo February 17 2016 httpswwwgtreviewcomnewsamericasargentina-scraps-mining-export-tax Accessed on July

7 201729 ldquoHigh hopes for inaugural Investing in LatAm Mining Cumbrerdquo June 26 2017 httpwwwminingweeklycomarticlehigh-hopes-for-inaugural-investing-in-

latam-mining-cumbre-2017-06-26rep_id3650 Accessed on June 27201730 ldquoA battle for supremacy in the lithium trianglerdquo June 15 2017 httpwwweconomistcomnewsamericas21723451-three-south-american-countries-have-

much-worlds-lithium-they-take-very-different Accessed on June 27 201731 BMI Industry View - Latin America - Q3 2017 July 4 2017 Accessed on July 4 201732 BMI Industry View - Latin America Telecoms - Q3 2017 June 21 2017 Accessed on July 4 201733 BMI Industry view-Insurance-Brazil-Q3 2017 May 12 2017 Retrieved on June 30 201734 The Economist Intelligence Unit Limited (2006 May) Brazil industry report Healthcare

httpwwweiucomindexasplayout=displayIssueArticleampissue_id=435624027ampopt=full Retrieved on June 30 2017 from Economist Intelligence Unit database

35 BMI Industry view-Brazil-Q2 2017 February 28 2017Retrieved on June 30201736 BMI Industry view-Mexico-Q3 2017 June 16 2017 Retrieved on June 30 201737 ldquoArgentina - A Destination for Investmentrdquo httpswww2deloittecomglobalenpagesmergers-and-acquisitionsarticlesargentina-destination-for-

investmenthtmlnc=138 ldquoMexico Mergers and Acquisitions Whatrsquos ahead The potential impact of the new US administrationrdquo httpswww2deloittecomglobalenpagesmergers-

and-acquisitionsarticlesgx-mexico-ma-what-is-aheadhtml39 ldquoIn the wake of the Panama Papers A guide for multinational corporationsrdquo httpswww2deloittecomusenpagesfinancial-advisoryarticlespanama-

papers-guide-multinational-corporationshtmlnc=1 40 ldquoMampA trends report 2016 - Is last years record pace sustainable rdquo httpswww2deloittecomusenpagesmergers-and-acquisitionsarticlesma-trends-

reporthtml41 ldquoWall Street Journal (WSJ) CFO Journal How to Address FCPA Risks in Emerging Market MampA Dealsrdquo httpdeloittewsjcomcfo20151019how-to-

address-fcpa-risks-in-emerging-market-ma-deals42 ldquoHuman Capital Considerations in Cross-border Dealsrdquo httpswww2deloittecomusenpagesmergers-and-acquisitionsarticlesma-human-capital-cross-

border-deals-latin-americahtml43 ldquoAcquisition Due Diligence Bribery amp Corruption Riskrdquo httpswww2deloittecomusenpagesfinancial-advisoryarticlesdue-diligence-bribery-corruption-

riskhtmlnc=144 ldquoMarket Consolidation Outlook ndash Investment strategies and merger amp acquisition activityrdquo httpwww2deloittecombrenpagesfinancearticlesestrategia-

investimentos-fusoes-aquisicoeshtml

Click for contents page

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Presentation notes

29

For purposes of this presentation

bull Latin America includes Mexico and countries in Central America and South America

bull Latin American target companies have been classified based on the dominant geography of the target company in Latin America

bull The region and country of the acquirer have been determined from the location of the ultimate parent

bull ldquoCross-border inbound MampArdquo refers to MampA deals where the acquirer is from non-Latin American countries and the dominant geography of the target company is Latin America

bull Completed and pending deals have been considered in the data presented Abandoned deals have not been considered

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited a UK private company limited by guarantee (ldquoDTTLrdquo) its network of member firms and their related entities DTTL and each of its member firms are legally separate and independent entities DTTL (also referred to as ldquoDeloitte Globalrdquo) does not provide services to clients Please see wwwdeloittecomabout to learn more about our global network of member firms

Deloitte provides audit amp assurance consulting financial advisory risk advisory tax and related services to public and private clients spanning multiple industries Deloitte serves four out of five Fortune Global 500reg

companies through a globally connected network of member firms in more than 150 countries bringing world-class capabilities insights and high-quality service to address clientsrsquo most complex business challenges To learn more about how Deloittersquos approximately 245000 professionals make an impact that matters please connect with us on Facebook LinkedIn or Twitter

This communication contains general information only and none of Deloitte Touche Tohmatsu Limited its member firms or their related entities (collectively the ldquoDeloitte Networkrdquo) is by means of this communication rendering professional advice or services Before making any decision or taking any action that may affect your finances or your business you should consult a qualified professional adviser No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication

copy 2017 For information contact Deloitte Touche Tohmatsu Limited

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited a UK private company limited by guarantee (ldquoDTTLrdquo) its network of member firms and their related entities DTTL and each of its member firms are legally separate and independent entities DTTL (also referred to as ldquoDeloitte Globalrdquo) does not provide services to clients Please see wwwdeloittecomabout to learn more about our global network of member firms

Deloitte provides audit amp assurance consulting financial advisory risk advisory tax and related services to public and private clients spanning multiple industries Deloitte serves four out of five Fortune Global 500reg

companies through a globally connected network of member firms in more than 150 countries bringing world-class capabilities insights and high-quality service to address clientsrsquo most complex business challenges To learn more about how Deloittersquos approximately 245000 professionals make an impact that matters please connect with us on Facebook LinkedIn or Twitter

This communication contains general information only and none of Deloitte Touche Tohmatsu Limited its member firms or their related entities (collectively the ldquoDeloitte Networkrdquo) is by means of this communication rendering professional advice or services Before making any decision or taking any action that may affect your finances or your business you should consult a qualified professional adviser No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication

copy 2017 For information contact Deloitte Touche Tohmatsu Limited