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M&A in Latin AmericaAmericas regionAmericas Financial Advisory12th Edition – April 2019

© 2017. For information, contact Deloitte Touche Tohmatsu Limited.

Contents

Executive summary 3

2018 − 2019 M&A snapshot 4

Top deals in 2018 − 2019 5

Macroeconomic indicators 6

Geographical M&A activity 7-14

M&A activity across industries 15-20

Perspectives 21-22

Leadership contacts 23-25

Sources and presentation notes 26-31

2


The M&A activity in Latin America in 2018-19 was driven by improving macroeconomic conditions, rise in commodity prices, and consumer spending. The Financial Services Industry (FSI) attracted a large portion of the investment by value (USD41 billion)1 followed closely by Energy, Resources and Industrials (ER&I) with USD40 billion 1. Brazil witnessed the highest number of deals (693)1 among all the Latin American countries, worth USD39 billion.1

Executive summary

3

The M&A activity in Latin America is expected to pick up as the region comes out of a major election cycle and policy uncertainty. Many Latin American countries are rich in resources that are expected to drive investments in the oil & gas and mining sectors.2-7

Brazil remains an attractive investment destination with stable inflation, high Foreign Direct Investment (FDI), and strong forex reserves.2,8

The CPTPP (The Comprehensive and Progressive Agreement for Trans-Pacific Partnership) may demonstrate to be a facilitator for M&A activity in Latin America.2-7

In 2018-19, FSI registered the highest M&A activity with deals worth ~USD 41 billion.1

ER&I recorded deals worth ~USD 40 billion over 2018-19, owing to a rise in demand for power.1

Brazil and Mexico recorded the highest M&A activity in consumer (CNSR), which was primarily driven by the growth in disposable income.1

Technology, Media & Telecom (TMT) M&A was mainly driven by adoption of Internet-of-Things (IoT), wireless broadband and over-the-top applications.9,10,11

Life Sciences Healthcare (LSHC) M&A volume was driven by Healthcare Provider & Services and Pharmaceuticals.1

In 2018-19, the majority of M&A activity in Latin America was intra-regional, with economies such as Brazil, Chile, and Mexico being the top investor countries.1

Outside the region, North America (especially the United States) and Europe (countries such as France, Italy, and UK) were the top investors in Latin America. The companies from these economies are looking to capture investment opportunities in developing markets.1

Political uncertainties, corruption, and the lack of adequate infrastructure could also weaken market perception, thus affecting M&A activity.2-7

Uncertainty in decisions related to the United States Mexico Canada Agreement (USMCA) may hamper investors confidence.2-7

Overdependence on commodities, and volatile oil & commodity prices could restrain M&A activity in Latin America.2-7

The ongoing economic crisis in Venezuela and the influx of refugees may also dampen the investment attractiveness of the region.12

Click for contents page Refer to "Sources" section for citations.

M&A trends in Latin America Industries

Geographies Challenges

2019 includes data from January 1, 2019 to February 28, 2019


Latin America’s M&A deal inflow between January 1, 2018 and February 28, 2019 totaled 1,560 deals worth USD109.4 billion1

2018-2019 M&A snapshot1

4

Value (USDbillion) Volume of deals

Top investor

companies

$15

1

$10

1

$6

83

$4

2AXA SA

$6

1

Suzano Papel e Celulose SA

Boeing CoInvestor GroupAmerican

International Group

Top investorcountries

$29

550

$21

167

$18

26

$5

116

Brazil$9

112

United States MexicoFrance Chile

Top targetindustries

$41

324

$40

425

$14

207

$1

149

Financial Services $14

454

Energy, Resources & Industrials

Life Sciences & HealthCare

ConsumerTechnology, Media & Telecom

Top destinationcountries

$39

693

$26

20

$12

151

$6

118

Brazil$6

197

Bermuda ArgentinaChile Mexico

Refer to "Sources" section for citations.Click for contents page2019 includes data from January 1, 2019 to February 28, 2019


Top deals in 2018-20191

5Refer to "Sources" section for citations.

Target Target industry Acquirer Acquirer industryValue of

transaction (in USD million)

XL Group Ltd Financial Services Industry (FSI) AXA SA Financial Services

Industry (FSI) 15,129

Fibria Celulose SA Energy, Resources and Industrials (ER&I)

Suzano Papel e Celulose SA

Energy, Resources and Industrials (ER&I) 10,286

Validus Holdings Ltd Financial Services Industry (FSI)

American International Group

Financial Services Industry (FSI) 5,565

Embraer Sa-Coml Aviation Bus

Energy, Resources and Industrials (ER&I) Boeing Co Energy, Resources

and Industrials (ER&I) 4,200

Sociedad Quimica Y Minera De

Energy, Resources and Industrials (ER&I) Inversiones TLC SpA Financial Services


Aspen Ins Hldg Ltd Financial Services Industry (FSI)

Apollo Global Management LLC


Undisclosed Fiber Optics Hldg

Technology, Media & Telecom (TMT) Enel X Intl Srl Energy, Resources

and Industrials (ER&I) 2,448

Eletropaulo Eletricidade

Energy, Resources and Industrials (ER&I)

Enel Brasil Investimentos


Ascenty Data Centers Financial Services Industry (FSI)

Stellar Participacoes LTDA


Telecom Argentina SA Technology, Media & Telecom (TMT) Investor Group Financial Services


Click for contents page2019 includes data from January 1, 2019 to February 28, 2019


Macroeconomic indicators13

6

2019 macroeconomic indicators (forecast)

Country

Nominal GDP (USD

billion)

Real GDP change per

annum(%)

GDP per head(USD)

Inward FDI flow/GDP

(%)

Exchange rate

LCU:USD

Consumerprices

(% change per

annum)

Lending interest rate (%)

Argentina 443.3 -0.9 9,828 2.2 42.1 40.7 44.2

Brazil 1,874.0 2.5 8,895 4.9 3.9 3.8 34.6

Chile 301.3 3.5 16,431 4.2 668.2 3.1 5.5

Colombia 329.9 3.1 6,618 4.1 3,137.2 2.8 12

Mexico 1,263.0 1.9 9,541 2.5 19.8 4.3 8.5

Peru 227.7 3.7 6,985 3.7 3.4 2.1 15.2

Click for contents page Refer to "Sources" section for citations.2019 includes data from January 1, 2019 to February 28, 2018


Geographical M&A activity


67 65 55 34 27

Australia Japan China Hong Kong Singapore

In intra-regional deals, Brazil remains the lead acquirer both in terms of value and volume. In inter-regional deals, North America and Europe are the biggest investors in the region1

Intra-regional deals hold a significant portion of the M&A pie in Latin America1

8

Latin America57.6%

Europe16.5%

North America16.3%

Asia-Pacific8.5% Africa/Middle East

1.1%

Deal value* = USD402

bn

2.4 1.4 0.6 0.1 0.03

Israel UAE Qatar Egypt SaudiArabia

11.0 10.2 5.8 3.9 2.4

China Japan Hong Kong Singapore Australia

Top acquirer nations by deal value (2015-19) in USD billion1

Top acquirer nations by deal volume (2015-19)1

Refer to "Sources" section for citations.

22.8

10.9 6.8 6.0 5.3

France Italy Spain UnitedKingdom

Luxembourg

132.0

50.5 37.0 24.0 14.9

Brazil UnitedStates

Chile Mexico Canada

17 12 4 4 2

UAE Israel Qatar South Africa Mauritius

168 125 125 77 54

Spain UnitedKingdom

France Switzerland Germany

1,818

628 409 357 285

Brazil UnitedStates

Mexico Chile Canada

*Excluding 117 deals for which the acquirer nation is not disclosed

Click for contents page 2019 includes data from January 1, 2019 to February 28, 2019

Latin America62.4%

North America16.6%

Europe15.0%

Asia-Pacific5.2%

Africa/Middle East0.8%

Deal volume* = 5,508


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Brazil remains on a sustainable growth path with stable inflation, high foreign direct investment, and strong forex reserves. These—along with large population, growing middle class, and long-term infrastructure development plans—make Brazil an attractive investment destination2,13

Brazil is aiming to cut its public debt through privatization, simplification of tax rules, and overhaul of pension system

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Possible unfavorable factors for M&A

M&A deals in Brazil 2015-191

M&A deals in Brazil by investor country and target industry (2015-19)1

* United States

Possible favorable factors for M&A

Click for contents page

Brazil

Economic recovery: Brazil is undergoing economic recovery and is expected to expand at an average rate of 2.5% during 2019-23. This is expected to be driven by:

o Rise of real household spending that is expected to come in at 3.1% in 2019 and steadily increase to 3.8% in 2023.14

o Increase in consumption and industrial activities. The PMI index for February 2019 has increased to 53.4 from 52.7 in January and 52.6 in December.2,15,16

Political stability: The election of President Jair Bolsonaro in 2018 concluded a period of political uncertainty that had been a bottleneck for private sector investment. In February 2019, the Brazilian government introduced a social security reform bill in an effort to ensure sustained growth in consumption.17

Credit growth: Credit growth is expected to pick up as sentiment improved post the general election in October 2018. The asset management sector has attracted investors looking to increase exposure to Brazil. This is also expected to aid the IPO market.18

Oil block auction: In September 2018, the Brazilian government conducted the fifth round of auction for pre-salt oil reserves that attracted major oil giants. This is expected to promote sustained investment in the oil and gas sector. Similar auctions are expected to be held in the coming years.19

Current account deficit: The current account deficit is estimated to widen from 1.7% of GDP in 2018 to 3.2% of GDP 2023 due to recovery in domestic demand. This recovery may result in higher imports which may negatively affect the GDP growth. The trade surplus is estimated to decrease from 2.5% of GDP in 2018 to 1.4% by 2023.2

Social Security Reform: The federal government recently submitted a social security reform bill to Congress, which caused strong volatility in the financial markets. The possibility of a long period of negotiations and difficulty with public deficit control may impact the financial market and investors risk perception.2

Mining sector: The mining industry in Brazil is forecasted to stagnate due to sharp decline in iron ore prices. The total value of the industry is forecasted to decline from USD55.2 billion in 2018 to USD53.3 billion by 2022.20

0

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1,000

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Value Volume

Refer to "Sources" section for citations.2019 includes data from January 1, 2019 to February 28, 2019


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However, increase in current account deficit (2.3% of GDP in 2020), proposed changes to the United States Mexico Canada Agreement (USMCA), and lowering of credit rating by S&P could impact foreign investments in Mexico3,21,22,23

Post election, Mexican economy is anticipated to grow supported by rising consumer demand and investment in oil and gas

10

M&A deals in Mexico 2015-191

M&A deals in Mexico by investor country and target industry (2015-19)1



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* United States


Political Stability: Andrés Manuel López Obrador took over as president in December 2018 and has since focused on delivering on poll promises of weeding out corruption, adopting responsive style of governance, removing inequality, and controlling incidence of violence.24

Consumer demand: The consumer demand outlook remains high supported by revival in consumer confidence since President Obrador took office. This might also be supported by remittance inflows from the United States.25

Oil exploration: The oil exploration activity has picked up pace. As of December 2018, there were six exploration wells being drilled, four of which were onshore. This represents the highest number of wells drilled in a single month since December 2013.26

Inflation: The inflation rate may drop to 3.7% in 2019-23, due to nominal increase in wages and spare industrial capacity. The inflation rate was above 5% in 2018, exceeding the 2-4% official target range due to high energy prices.3

Credit ratings: In March 2019, S&P lowered the credit rating for Mexico’s national oil company Petroleos Mexicanos along with other companies and financial institutions. This might impact the attractiveness of the country as an investment destination.23

Trade agreement: The US auto unions along with the food and agricultural sector is demanding a revision to the USMCA to safeguard jobs and increase minimum wage. This may increase cost of manufacturing and lead to short term uncertainty for external trade.21,22

Current account deficit: The uncertainty around external trade is expected to negatively affect the current account deficit. The deficit is expected to widen with a peak of about 2.3% of GDP by 2020. Thereafter, it is estimated to improve to about 1.8% of GDP by 2022.3

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Mexico


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010203040

ER&I FSI CNSR LSHC TMT

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In the short term, the GDP growth is estimated to decline from 3.9% in 2018 to 2.8% in 2020. However, with the rise in mineral output and copper prices, GDP growth is expected to rebound to 3.1% by 2021, as minerals (mainly copper) account for about 50% of exports4,27

Chile is strengthening ties with Asia and focusing on renewable energy to accelerate investment

11

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M&A deals in Chile 2015-191

M&A deals in Chile by investor country and target industry (2015-19)1



070140210280350

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* United States


Policy trends: The government is expected to maintain business friendly policies including a tax reform bill intended to simplify tax structure and promote investment. A recently created USD9 billion infrastructure fund is expected to support concessions for Public Private Partnerships (PPP) projects.4,28

International relations: Apart from traditional relations with the US and other Latin American countries, Chile is strengthening its ties with Asia, particularly with China, for accelerating economic growth and investment. In March 2019, it revised the free trade agreement with China with provisions such as exemption from certain tariffs and opening up service sectors.4,29

Sector focus: Being an oil importer country, the government is focusing on renewable energy by providing tax incentives for investors. This is expected to increase investment for setting up renewable energy.4

Mining growth: The sector is expected to register solid growth in 2019 and beyond, mainly driven by the rise in copper prices and improved profit margins. This might encourage more investment in Chile’s mining sector.30

Banking reforms: The General Banking Law was updated to combine the Superintendencia de Bancos e Instituciones Financieras Chile with Financial Markets Commission, which currently regulates the insurance and securities market into a single authority. To be implemented on June 1 2019, the law is expected to increase transparency in the system.31

Energy security: Being an oil importer, Chile suffers from high costs and vulnerability to energy shortages and pricing decreased during the last years4. President Sebastián Piñera's administration is likely to continue the controversial use of hydroelectric power in southern Chile.4

Currency fluctuation: Peso may remain volatile due to global risk sentiments such as ongoing US monetary tightening and low interest rates by European Central Bank.4,32

Political uncertainty: Chile’s Congress has been divided following the elections in November 2017, with no coalition holding the majority in the upper or lower house. This may delay policymaking in the event of gridlock.4


Chile


050100150

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Dea

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This may lead to lower fiscal deficit and improved investor confidence. Additionally, growth in the mining sector as a result of a strong project pipeline is expected to lift GDP growth to 3.1% in 2019 and to an average of 3.4% in 2020-235

Investment growth in Colombia is expected to be boosted by market friendly reforms by the new government and oil exploration

12

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M&A deals in Colombia 2015-191

M&A deals in Colombia by investor country and target industry (2015-19)1




* Colombia** United States


Business environment: The government is taking steps to improve the business environment by streamlining bureaucracy, upgrading transport infrastructure and reducing labor informality. The Organisation for Economic Co-operation and Development (OECD) membership and steps taken as part of the accession process, is expected to promote competition.5

Fiscal deficit: The ongoing tax reforms and higher oil prices are anticipated to narrow the non-financial public-sector (NFPS) deficit to 1.1% of GDP in 2023, down from 1.9% in 2018. Additionally, the NFPS debt/GDP ratio is estimated to continue its rise, peaking at 52.7% in 2019, before declining to 48.9% by 2023.5

Oil block auctions: For increased investment in the oil and gas sector, the government is auctioning 20 production areas. With estimated reserves of one billion barrels, it is expected to attract investment of USD600 million.33

Mining sector: Colombia's mining sector is expected to post growth, supported by competitive operating costs and a strong gold project pipeline. The industry value is estimated to grow from USD6.5 billion in 2019 to USD8.7 billion by 2023. Coal is expected to remain the dominant mineral due to the presence of major international miners.34

New telecom regulator: Colombia’s telecom ministry is planning to create a convergent telecom regulator to streamline licensing process and attract greater investment. This is expected to facilitate consolidation efforts in the highly fragmented wireline segment.35

Migrants: As of January 2019, Colombia had absorbed about three million migrants from Venezuela, which is estimated to decrease the gross domestic product of Colombia by 0.5% per year over the coming years if migration continues.36,37


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However, corruption scandals involving the former Peruvian president might impact foreign investment and infrastructure funding. Also, the trade wars between US and China, two of Peru’s largest trading partners, may negatively affect the trade surplus6,38

Growth in Peru is estimated to be driven by the reforms taken by the new government and investment in the mining sector

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M&A deals in Peru by investor country and target industry (2015-19)1

* United States



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Refer to "Sources" section for citations.Click for contents page

Financial risk: The securities regulator in Peru, Superintendencia del Mercado de Valores (SMV), is taking steps to tackle capital market concentration that might become a threat to financial stability. Currently, some of the groups that own the top banks also control the largest mutual funds and main brokerages.39

Policy trend: The focus of the new government is centered on reforms that include anti-graft measures, promoting competition, infrastructure development, modernization, and fiscal consolidation. The government is also aiming to accelerate economic growth by expediting post-flood reconstruction efforts.6

Fiscal deficit: The fiscal deficit is expected to narrow as the government gradually dials down fiscal stimulus and a stronger economy increases revenue. The non-financial public-sector deficit is estimated to narrow from 3.1% of GDP in 2018 to 0.5% by 2023.6

Copper mining: Peru's copper sector is estimated to remain an investment hot spot with steady production growth supported by a strong project pipeline, competitive operating costs, and rising copper prices. The output is estimated to increase from 2.5mnt in 2019 to 3.8mnt by 2028, averaging 4.5% compound annual growth.40

Political stability: New President Martín Vizcarra took office in March 2018 after his predecessor—Pedro Pablo Kuczynski—resigned following mounting allegations of corruption. The political risk stems from the ongoing investigations into cases of corruption and money laundering.6

Trade war: The ongoing trade war between China and the US may result in lower import demand for commodities along with a drop in commodity prices, since both of these countries are Peru’s two largest trade and investment partners. Due to this, the trade surplus in 2018-19 may narrow down to 2% of GDP from previously projected 2.4%.6


Peru


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The economy is expected to get support from the USD57 billion loan package from the International Monetary Fund (IMF). At the same time, uncertainty arising out of the upcoming election, currency crisis, and the after effects of the country’s 2018 recession may result in a cautious stance by investors7,41

Argentina’s agricultural sector rebound along with subsidy and minimum wage increases are expected to aid rise of household income

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M&A deals in Argentina 2015-191

M&A deals in Argentina by investor country and target industry (2015-19)1



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Argentina US* Mexico China Col**

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Agriculture sector: Agricultural production began to rebound in Q418, growing 4.7% y-o-y in December, and is expected to be a key bright spot. Rebound in agricultural harvest may provide near-term support to economic activity.42

Minimum wage: In late February 2019, the government agreed to move up a planned minimum wage increase to March, from June initially, which is estimated to increase household purchasing power.43

Subsidies: In March 2019, President Mauricio Macri announced a 46% increase in subsidies for poor families with children, which is expected to stimulate consumer demand in the economy.44

Upcoming elections: The elections in October 2019 are expected to lead to obstruction of key policy decisions by the opposition parties. The ruling government might have to negotiate support for key decisions on an ad hoc basis. This could erode investor sentiments in short term.7

Recession in 2018: The recession, as a result of severe drought, and compounded by the currency crisis, is expected to have a strong negative carryover effect, leading to a negative full-year GDP outturn in 2019.7

Consumer confidence: Consumer confidence is expected to remain low as a result of the high rate of inflation and currency depreciation which has severely eroded spending power. The focus of purchases may remain on essential items over non-essential ones.45

Telecommunication: Being a mature telecom market, operators are moving towards expanding their value added offerings. However, regulatory uncertainty, a difficult economic situation, and the concentration of market power may limit investment.46

*United States**Colombia


Argentina

mpestana

Sticky Note

Unmarked set by mpestana


M&A activity across industries


United States

Canada

The industry is expected to attract higher investment in the mining and oil & gas sector. Upstream oil & gas is expected to witness an increase in investment from USD80 billion in 2018 to USD110 billion in 2022, lead by Brazil, Argentina, and Mexico. Growth in mining sector is expected to come from higher commodity prices47,48

In the ER&I industry, Brazil registered the highest M&A activity; investments were primarily driven by the power sector

16

15%

Oil & Gas 13%

16%

11%

Metals & Mining

% of deals in 2018-19 bytop ER&I sectors1

37.143.6

60.8

37.9

2.0

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Brazil 8%

6%

33%

7%

% of deals in 2018-19 bytop investor countries1

ChileBrazil 42%

10%Mexico

11%

% of deals in 2018-19 by topdestination countries1

M&A Deals in ER&I from 2015 -191

ER&I66%FSI

26%

CNSR6%

Others2%

M&A deals by acquirer industry from 2015 -191

Industry Value of transaction (USD billion) Number of transactions

ER&I 116.8 1,112FSI 60.9 438

CNSR 3.5 102Others* 0.11 33


Energy, Resources and Industrials (ER&I)

10%Peru

*Others include LSHC, GPS, and TMT


Peru

Power

Building / Construction

& Engineering

Value of deals Volume of deals


Educational Services

17

14%

11%

17%

8%

22.7

17.9

20.5

12.7

0.9

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M&A Deals in CNSR from 2015-191

CNSR57%

FSI31%

ER&I… Others6%

M&A deals by acquirer industry from 2015-191


CNSR 46.1 982FSI 21.3 526

ER&I 4.2 100Others** 3.1 112

Mexico 14%

Chile 11%

Brazil 43%

Argentina 8%

10%

Mexico 9%

Brazil 33%

9%

Food &Beverage

T&I*

Professional services




Consumer (CNSR)

Brazil has a positive outlook for consumer spending over 2019-23 as the economy continues to recover. Real household spending is estimated to come in at 3.1% in 2019 and steadily rise to 3.8% in 2023. This may be led by an increase in disposable income from USD13,333+ in 2019 to USD15,130+ in 202314,49

With 43% of the total deals, Brazil attracted most number of deals

Chile

**Others include LSHC, GPS, and TMT* Transportation & Infrastructure

+Exchange rate as of March 4th, 2019


% of deals in 2018-19 bytop CNSR sectors1



United States


The Telecommunications industry is increasingly moving towards wireless broadband and over-the-top applications from wireline technology. Further, policy initiatives are expected to encourage the adoption of cloud computing and IoT in financial services and manufacturing9,10,11

SoftwareIT consulting & services

18

18%

8%

23%

8%

5.8 6.0

10.211.5

2.4

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M&A Deals in TMT from 2015-191

Mexico 13%

7%

Brazil 51%

Argentina 6%

United States 20%

Mexico 7%

Brazil 38%




Technology, Media & Telecom (TMT)

Investment in the TMT sector is expected to be driven by data-centric expansion strategy and adoption of IoT

Colombia

*Others include LSHC, GPS, and ER&I

TMT59%FSI

28%

CNSR9% Others

4%



TMT 19.3 419FSI 11.05 199

CNSR 2.8 67Others* 2.8 30

4%


% of deals in 2018-19 bytop TMT sectors1



UnitedKingdom

Computers & Peripherals

Publishing


Asset Management

Other financials

Brazil (123 deals) and Mexico (54 deals) were driving the M&A activity in the FSI industry in 2018-19. Disposable income in Brazil is anticipated to pick up in 2019, which is expected to provide support to the growth of insurance and the overall financial services industry18,50

In 2018, robust M&A activity continued in Latin America, lead by the acquisition of XL Group Ltd by Axa SA for USD15 billion

19

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16%

30%

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300

350

0

10

20

30

40

2015 2016 2017 2018 2019

Dea

l vol

um

es

Dea

l val

ue

in U

SD

bill

ion

M&A Deals in FSI from 2015-191

FSI86%

CNSR6%

ER&I5%

Others3%



FSI 98.5 945CNSR 0.4 61ER&I 2.5 56

Others* 4.3 35

Mexico 17%

Chile 11%

Brazil 38%

7%

11%

10%

Brazil 31%

11%

Non residential


Value of deals

United States


Financial Services Industry (FSI)

*Others include LSHC, GPS, and TMT

Mexico Insurance


% of deals in 2018-19 bytop FSI sectors1



Argentina Chile

Volume of deals

© 2019. For information, contact Deloitte Touche Tohmatsu Limited. 20

28%

19%

36%

15%

M&A Deals in LSHC from 2015-191

LSHC62%

FSI28%

CNSR6%

Others4%



LSHC 2.3 252FSI 3.0 114

CNSR 0.01 23Others* 0.26 16

Colombia 16%

Mexico 5%

Brazil 60%

Chile 4%

Canada 13%

France8%

Brazil 52%

5%


Value of deals


Life Sciences Healthcare (LSHC)

United States

The pharmaceutical and health care market is expected to grow, as a result of the growing middle class in Latin America, rise in chronic diseases, and better access to health care services. The health care market is expected to grow from USD416 billion in 2019 to USD487 billion in 2022 at a constant exchange rate51,52

LSHC industry is expected to attract investments in 2019-22 due to improved access to healthcare and the rising demand for medicines

*Others include ER&I, GPS, and TMT

2.1

0.8

1.41.0

0.2

0

20

40

60

80

100

120

140

160

0

1

2

3

2015 2016 2017 2018 2019

Dea

l vol

um

es

Dea

l val

ue

in U

SD

bill

ion

Switzerland

Healthcare Providers &

Services

Pharma-ceuticals

Healthcare Equipment & Supplies

Hospitals


% of deals in 2018-19 bytop LSHC sectors1



Volume of deals


Perspectives


Perspectives

22

The Future of the DealExplore key trends that Deloitte expects will impact the global M&A market in 2019 and beyond. The report outlines the opportunities and challenges that these themes present to companies in search of growth. It is aimed at decision makers involved at any stage of the M&A lifecycle.

The state of the deal: M&A trends 2019 Deloitte’s 6th annual in-depth look at M&A activity. The Deloitte M&A trends report looks at M&A activity by surveying more than 1,000 executives at corporations and private equity firms about the current year and their expectations for the next 12 months.

Market Consolidation Outlook – Investment strategies and merger & acquisition activityDeloitte Brazil presents the results of its survey that tackles its challenging local M&A market. The survey, led by Deloitte Brazil’s Corporate Finance Advisory practice, presents the opinions of top executives from 221 companies operating in several industry segments. Read more about how M&As have become an alternative to organic growth in Brazil, the expectations for the M&A market in the next two years, and experiences and challenges for closing deals in Brazil.

Mexico Mergers and Acquisitions What’s ahead: The potential impact of the new US administrationThis report explores what the uncertainty around NAFTA and new US domestic policies might mean for cross-border investment and M&A. Read more about the potential impact on Mexico’s key sectors, including manufacturing, agriculture, energy, telecommunications, and financial services.

Argentina - A Destination for Investment?New government initiatives aim to make the country healthier and more open to foreign investors. This report looks at how a new influx of foreign investors has helped accelerate Argentina’s deal flow to date and how an even greater wave of interest is likely to develop in the years to come. Read more about how an improved economy could buoy all sectors.

Wall Street Journal (WSJ) CFO Journal: How to Address FCPA Risks in Emerging Market M&A DealsGain additional insights around considerations for addressing FCPA risks in this piece based on the article M&A in emerging markets: A fresh look at successor liability associated with the Foreign Corrupt Practices Act.

Human Capital Considerations in Cross-border DealsAcquiring an overseas company may open up new markets and business opportunities. However, foreign companies may also require a number of unique human capital considerations that may impact deal value. Read more about the impact of these key human capital considerations.

Acquisition Due Diligence Bribery & Corruption RiskBuyers that are considering an acquisition usually encounter a competitive and time-sensitive diligence process focused on assessing the target’s performance key risks. Learn more about how a buyer’s failure to adequately consider bribery and corruption risk may lead to the purchase of an overvalued company and serious collateral consequences.


Deloitte produces original and informative articles that leverage the spectrum of our experience and knowledge throughout our global network. Listed below are recent pieces that provide insights for businesses on events and trends in the Americas region.

https://www2.deloitte.com/uk/en/pages/financial-advisory/articles/future-of-the-deal.html

https://www2.deloitte.com/us/en/pages/mergers-and-acquisitions/articles/ma-trends-report.html

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/mergers-acqisitions/us-mergers-acquisitions-trends-2019-report.pdf

http://www2.deloitte.com/br/en/pages/finance/articles/estrategia-investimentos-fusoes-aquisicoes.html

http://www2.deloitte.com/br/en/pages/finance/articles/estrategia-investimentos-fusoes-aquisicoes.html

https://www2.deloitte.com/global/en/pages/mergers-and-acquisitions/articles/gx-mexico-ma-what-is-ahead.html



https://www2.deloitte.com/global/en/pages/mergers-and-acquisitions/articles/argentina-destination-for-investment.html?nc=1

https://www2.deloitte.com/global/en/pages/mergers-and-acquisitions/articles/argentina-destination-for-investment.html?nc=1

http://deloitte.wsj.com/cfo/2015/10/19/how-to-address-fcpa-risks-in-emerging-market-ma-deals/

https://www2.deloitte.com/us/en/pages/mergers-and-acquisitions/articles/ma-human-capital-cross-border-deals-latin-america.html



https://www2.deloitte.com/us/en/pages/financial-advisory/articles/due-diligence-bribery-corruption-risk.html?nc=1

https://www2.deloitte.com/us/en/pages/financial-advisory/articles/due-diligence-bribery-corruption-risk.html?nc=1


Leadership contacts


Americas region leadership—M&A Transaction Services

24

Americas region Argentina Brazil Canada

Hernan [email protected]

Jose [email protected]

Marcelo [email protected]

Ronaldo Xavier [email protected]

Mark [email protected]

Chile Colombia Mexico United States

Pedro Castello Iglesias [email protected]

Luis [email protected]

Guillermo [email protected]

Russell [email protected]


mailto:[email protected]










Americas region leadership—Corporate Finance

25

Americas region Argentina Brazil Canada

Will [email protected]

Marcos [email protected]

Reinaldo [email protected]

Robert [email protected]

Chile Mexico United States

Jaime [email protected]

Mauricio [email protected]

Phil Colaco [email protected]










Sources and presentation notes


Presentation notes

27

For purposes of this presentation:

• Latin America includes Mexico and countries in Central America and South America.

• The Latin American target companies have been classified based on the dominant geography of the target company in Latin America.

• The region and country of the acquirer have been determined from the location of the ultimate parent.

• “Cross-border inbound M&A” refers to M&A deals where the acquirer is from non-Latin American countries and the dominant geography of the target company is Latin America.

• Completed and pending deals have been considered in the data presented. Abandoned deals have not been considered.


Sources (1/2)

28

1. Thomson Reuters. (2019). M&A Overview. http://mergers.thomsonib.com/NASApp/DealSearch/MAOverview.htm?ExpressCode=DELOITTEDEALS. Retrieved on February 28 , 2019 from Thomson ONE database.

2. The Economist Intelligence Unit Limited. (2019). Brazil country report. Retrieved on February 28 , 2019 from Economist Intelligence Unit database.3. The Economist Intelligence Unit Limited. (2019). Mexico country report. Retrieved on February 28 , 2019 from Economist Intelligence Unit database.4. The Economist Intelligence Unit Limited. (2019). Chile country report. Retrieved on February 28 2019 from Economist Intelligence Unit database.5. The Economist Intelligence Unit Limited. (2019). Colombia country report. Retrieved on February 28 2019 , from Economist Intelligence Unit database.6. The Economist Intelligence Unit Limited. (2019). Peru country report. Retrieved on February 28 , 2019 from Economist Intelligence Unit database.7. The Economist Intelligence Unit Limited. (2019). Argentina country report. Retrieved on February 28 , 2019 from Economist Intelligence Unit database.8. Fitch Solutions - Brazil Retail Trends. Accessed on March 7, 2019.9. Fitch Solutions – Brazil Information Technology Report, Q1 2019. Accessed on March 12, 2019. 10. Fitch Solutions – Brazil Telecommunications Report, Q1 2019. Accessed on March 12, 2019. 11. Fitch Solutions – Latin America Telecommunications Report, Q2 2019. Accessed on March 13, 2019. 12. https://www.bloomberg.com/opinion/articles/2019-02-10/venezuela-crisis-south-america-is-a-battlefield-in-the-new-cold. Accessed on March 7, 2019. 13. The Economist Intelligence Unit Limited. (2019). Market indicators and forecasts. http://data.eiu.com. Retrieved on February 28 , 2019 from Economist

Intelligence Unit database.14. Fitch Solutions – Brazil Consumer & Retail Report, Q2 2019. Accessed on March 7, 2019. 15. https://tradingeconomics.com/brazil/manufacturing-pmi. Accessed on March 7, 2019. 16. https://www.markiteconomics.com/Public/Home/PressRelease/6d71c88e1647455097f91ea536b7d56b. Accessed on March 7, 2019.17. https://riotimesonline.com/brazil-news/rio-business/praise-and-criticism-for-brazils-new-social-security-reform-bill/. Accessed on March 7, 2019.18. Fitch Solutions – Brazil Banking & Financial Services Report, Q2 2019. Accessed on March 7, 2019.19. Fitch Solutions – Brazil Oil & Gas Report, Q1 2019. Accessed on March 7, 2019. 20. Fitch Solutions – Brazil Mining Report, Q1 2019. Accessed on March 7, 2019.21. https://auto.economictimes.indiatimes.com/news/industry/us-auto-union-wants-trade-deal-with-canada-mexico-revised/68286994. Accessed on March 7, 2019. 22. https://www.agriculture.com/news/business/ag-risks-losing-much-of-the-trade-gains-achieved-over-the-past-three-decades. Accessed on March 7, 2019. 23. https://in.reuters.com/article/us-mexico-pemex-s-p/sp-cuts-pemex-credit-rating-as-outlook-sinks-for-other-mexican-firms-banks-idINKCN1QL1W8. Accessed on

March 8, 2019. 24. http://country.eiu.com/article.aspx?articleid=1407686124&Country=Mexico&topic=Politics&subtopic=Forecast&subsubtopic=Political+stability. Accessed on

March 7, 2019. 25. Fitch Solutions – Mexico Consumer & Retail Report, Q2 2019. Accessed on March 7, 2019. 26. Fitch Solutions – Mexico Oil & Gas Report, Q2 2019. Accessed on March 7, 2019. 27. https://www.bloomberg.com/news/articles/2019-03-18/chile-s-economy-ends-2018-on-a-high-note-as-mining-recovers. Accessed on March 20, 2019. 28. https://www.worldbank.org/en/country/chile/overview. Accessed on March 8, 2019. 29. https://www.china-briefing.com/news/china-chile-fta-upgraded-market-opportunities-investors/. Accessed on March 8, 2019. 30. Fitch Solutions – Chile Mining Report, Q2 2019. Accessed on March 8, 2019.


http://mergers.thomsonib.com/NASApp/DealSearch/MAOverview.htm?ExpressCode=DELOITTEDEALS

http://www.eiu.com/FileHandler.ashx?issue_id=1807222564&mode=pdf






https://www.bloomberg.com/opinion/articles/2019-02-10/venezuela-crisis-south-america-is-a-battlefield-in-the-new-cold

http://data.eiu.com/

https://tradingeconomics.com/brazil/manufacturing-pmi

https://www.markiteconomics.com/Public/Home/PressRelease/6d71c88e1647455097f91ea536b7d56b

https://riotimesonline.com/brazil-news/rio-business/praise-and-criticism-for-brazils-new-social-security-reform-bill/

https://auto.economictimes.indiatimes.com/news/industry/us-auto-union-wants-trade-deal-with-canada-mexico-revised/68286994

https://www.agriculture.com/news/business/ag-risks-losing-much-of-the-trade-gains-achieved-over-the-past-three-decades

https://in.reuters.com/article/us-mexico-pemex-s-p/sp-cuts-pemex-credit-rating-as-outlook-sinks-for-other-mexican-firms-banks-idINKCN1QL1W8

http://country.eiu.com/article.aspx?articleid=1407686124&Country=Mexico&topic=Politics&subtopic=Forecast&subsubtopic=Political+stability

https://www.bloomberg.com/news/articles/2019-03-18/chile-s-economy-ends-2018-on-a-high-note-as-mining-recovers

https://www.worldbank.org/en/country/chile/overview

https://www.china-briefing.com/news/china-chile-fta-upgraded-market-opportunities-investors/


Sources (2/2)

29

31. Fitch Solutions – Chile Banking & Financial Services Report, Q2 2019. Accessed on March 8, 2019.32. https://www.reuters.com/article/emerging-markets-latam/emerging-markets-latam-currencies-plunge-as-argentina-peso-sets-record-low-idUSL3N20U42Q.

Accessed on March 11, 2019.33. https://energy.economictimes.indiatimes.com/news/oil-and-gas/colombia-hopes-auction-of-20-blocks-will-add-1-bln-barrels-to-oil-reserves/68105542.

Accessed on March 11, 2019.34. Fitch Solutions – Colombia Mining Report, Q1 2019. Accessed on March 11, 2019.35. Fitch Solutions – Colombia Telecommunications Report, Q1 2019. Accessed on March 11, 2019. 36. https://www.aljazeera.com/news/2019/03/colombia-border-hospitals-struggle-venezuelan-migrant-influx-190305135211708.html. Accessed on March 11,

2019. 37. https://www.reuters.com/article/us-venezuela-migration-colombia/venezuelan-migrant-influx-costs-colombia-05-percent-of-gdp-president-idUSKCN1M82B9.

Accessed on March 15, 2019. 38. https://www.fairobserver.com/region/latin_america/peru-corruption-odebrecht-protests-martin-vizcarra-latin-america-news-17625/. Accessed on March 12,

2019. 39. https://www.bloomberg.com/news/articles/2018-11-23/peru-regulator-moving-to-tackle-concentration-in-capital-markets. Accessed on March 10, 2019. 40. Fitch Solutions – Peru Mining Report, Q2 2019. Accessed on March 12, 2019. 41. https://www.reuters.com/article/us-argentina-imf/imf-boosts-argentina-program-to-57-billion-in-bid-to-halt-peso-slide-idUSKCN1M62US. Accessed on March

12, 2019. 42. Fitch Solutions - Adjustment Programme Drives Argentina's Recession. Accessed on March 12, 2019. 43. https://www.reuters.com/article/argentina-economy-wages/argentina-to-hike-minimum-wage-early-as-inflation-stays-high-idUSL1N20N1AA. Accessed on

March 12, 2019. 44. https://www.reuters.com/article/us-argentina-politics-macri/argentinas-macri-to-increase-subsidies-for-poor-families-idUSKCN1QI4SM. Accessed on March

12, 2019. 45. Fitch Solutions – Argentina Consumer & Retail Report, Q2 2019. Accessed on March 12, 2019. 46. Fitch Solutions – Argentina Telecommunications Report, Q2 2019. Accessed on March 12, 2019. 47. Fitch Solutions – Latin America Oil & Gas Report, Q1 2019. Accessed on March 12, 2019. 48. https://www.ogj.com/articles/print/volume-117/issue-3/special-report-capital-spending-update/capital-investment-continues-to-increase-in-latin-

america.html. Accessed on March 15, 2019. 49. https://www.oanda.com/fx-for-business/historical-rates. Accessed on March 4, 2019. 50. Fitch Solutions – Brazil Insurance Report, Q2 2019. Accessed on March 12, 2019. 51. Fitch Solutions – Latin America Medical Devices Report, Q1 2019. Accessed on March 13, 2019. 52. Fitch Solutions – Latin America Pharmaceutical & Healthcare Report, Q1 2019. Accessed on March 13, 2019.


https://www.reuters.com/article/emerging-markets-latam/emerging-markets-latam-currencies-plunge-as-argentina-peso-sets-record-low-idUSL3N20U42Q

https://energy.economictimes.indiatimes.com/news/oil-and-gas/colombia-hopes-auction-of-20-blocks-will-add-1-bln-barrels-to-oil-reserves/68105542

https://www.aljazeera.com/news/2019/03/colombia-border-hospitals-struggle-venezuelan-migrant-influx-190305135211708.html

https://www.reuters.com/article/us-venezuela-migration-colombia/venezuelan-migrant-influx-costs-colombia-05-percent-of-gdp-president-idUSKCN1M82B9

https://www.fairobserver.com/region/latin_america/peru-corruption-odebrecht-protests-martin-vizcarra-latin-america-news-17625/

https://www.bloomberg.com/news/articles/2018-11-23/peru-regulator-moving-to-tackle-concentration-in-capital-markets

https://www.reuters.com/article/us-argentina-imf/imf-boosts-argentina-program-to-57-billion-in-bid-to-halt-peso-slide-idUSKCN1M62US

https://www.reuters.com/article/argentina-economy-wages/argentina-to-hike-minimum-wage-early-as-inflation-stays-high-idUSL1N20N1AA

https://www.reuters.com/article/us-argentina-politics-macri/argentinas-macri-to-increase-subsidies-for-poor-families-idUSKCN1QI4SM

https://www.ogj.com/articles/print/volume-117/issue-3/special-report-capital-spending-update/capital-investment-continues-to-increase-in-latin-america.html

https://www.oanda.com/fx-for-business/historical-rates


21Sectors

6 Industries Consumer Financial

Services

Banking & Capital Markets

Insurance

Life Sciences & Health Care

Life Sciences

Health Care

Energy, Resources & Industrials

Technology, Media & Telecom

Telecom, Media & Entertainment

Government & Public Services

Health & Social Care

Power & Utilities

International Donor

Organizations

Transportation, Hospitality &

Services (THS)

Consumer Products

Retail, Wholesale & Distribution

Mining & Metals

Oil, Gas & Chemicals

Transport

Industrial Products &

Construction

Technology

Investment Management

Real Estate

Defense, Security & Justice

Civil GovernmentAutomotive

Health & Social Care as a separate sector with operational integration with Private Health CareTransport as separate sector with operational integration with Private Transportation subsector in THS

Notes:Digital platform organizations will remain within sectors but are specifically supported as a segment

New industry alignment

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