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  • M&A in Latin America Americas region Americas Financial Advisory 14th Edition – October 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 26-30

    2

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

    In 2018-19, M&A activity in Latin America was driven by privatization of state-owned companies, rise in consumption, reforms undertaken by governments, and decrease in benchmark rates in Latin American countries. The Energy, Resources, and Industrials (ER&I) industry attracted a large portion of the investment by value (USD58 billion), followed by Financial Services Industry (FSI) with USD49 billion. Brazil witnessed the highest number of deals (984), worth USD64 billion, among all the countries in Latin America.1-7

    Executive summary

     M&A activity in Latin America is expected to be influenced by privatization of state-owned companies in Brazil, reforms undertaken by the government and decrease in benchmark rates.2

     In addition, increase in remittances to Mexico, competitive plan unveiled by government in Peru, and estimated rise in private consumption in Colombia might also attract the investors.2-7

     The new pension reform in Chile is expected to increase the pension amount by levying a new employer contribution.4

     Colombia is advancing its relations with many Asian countries, including China, to attract investments in a variety of sectors.5

     In 2018-19, ER&I registered the highest M&A activity with deals worth USD 58 billion.1

     FSI recorded 447 deals worth USD 49 billion over the same period.1

     In Consumer (CNSR), Brazil and Chile recorded the highest M&A activity in 2018-19, contributing to more than 50% of the deals by value.1

     In TMT, Software and IT consulting witnessed the majority of the deals at about 43%.1

     In Life Sciences Health Care (LSHC), the M&A volume was driven by Health care Provider & Services and Pharmaceuticals.1

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

     Outside the region, North America (United States), Europe (France and Italy), and Asia (China and Japan) were the top investors by value. Contribution from countries in Africa / Middle East was about 1.0%.1

     Resignation of finance minister of Mexico over differences with the current president may have an adverse effect on investor sentiments.3

     Ratings downgrade for Mexico, policy paralysis in Chile and Colombia, and increased awareness of political effects on mining may affect the investment climate.2,4,5

     The upcoming elections in Argentina in October 2019, may keep the potential investors at bay due to political instability.7

    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 August 31, 2019

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

    Latin America’s M&A deal inflow between January 1, 2018 and August 31, 2019 totaled 2,189 deals worth USD152.3 billion1

    2018-2019 M&A snapshot1

    4

    Value (US billion) Volume of deals

    Top investor

    companies

    $19

    126

    $15

    1

    $10

    1

    $4

    2 AXA SA

    $6

    1

    Suzano Papel e Celulose SA Boeing Co

    Investor Group

    American International

    Group

    Refer to "Sources" section for citations.

    Top investor countries

    $42

    785

    $28

    43

    $25

    233

    $6

    119

    Brazil $11

    160

    United States

    CanadaFrance Chile

    Top destination countries

    $64

    984

    $28

    32

    $14

    211

    $8

    164

    Brazil $11

    272

    Bermuda ColombiaChile Mexico

    Top target industries

    $58

    580

    $49

    447

    $23

    647

    $3

    215

    $19

    298

    Life Sciences & Health Care

    Energy, Resources & Industrials

    Financial Services

    Technology, Media & Telecom

    Consumer

    2019 includes data from January 1, 2019 to August 31, 2019 Click for contents page

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

    Top deals in 2018-20191

    5Refer to "Sources" section for citations.

    Target Target industry Acquirer Acquirer industry Value of

    transaction (in US 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

    Transportadora Associada

    Energy, Resources and Industrials (ER&I) Investor Group

    Financial Services Industry (FSI) 8,682

    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 Industry (FSI) 4,066

    Banco Santander (Mexico) SA

    Financial Services Industry (FSI) Banco Santander SA

    Financial Services Industry (FSI) 2,865

    Aspen Ins Hldg Ltd Financial Services Industry (FSI) Apollo Global Management LLC

    Financial Services Industry (FSI) 2,552

    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

    Financial Services Industry (FSI) 1,861

    2019 includes data from January 1, 2019 to August 31, 2019 Click for contents page

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

    Macroeconomic indicators8

    6

    2019 macroeconomic indicators (Forecast)

    Country Nominal

    GDP (US billion)

    Real GDP change per

    annum (%)

    GDP per head

    (USD)

    Inward FDI flow/GDP

    (%)

    Exchange rate

    LCU:USD

    Consumer prices

    (% change per annum)

    Lending interest rate (%)

    Argentina 434.0 -2.9 9,691.2 2.2 70.5 53.4 65.6

    Brazil 1,902.0 0.8 9,028.9 4.8 3.7 3.8 36.0

    Chile 311.6 2.6 16,441.1 2.3 681.8 2.3 5.5

    Colombia 314.9 3.1 6,255.7 4.1 3,410.1 3.5 11.9

    Mexico 1,277.0 0.3 10,006.7 2.4 20.1 3.6 8.4

    Peru 234.1 3.0 7,161.3 2.6 3.4 2.2 14.6

    Refer to "Sources" section for citations. 2019 includes data from January 1, 2019 to August 31, 2019

    Click for contents page

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

    Geographical M&A activity

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

    Latin America 62.7%

    North America 16.6%

    Europe 14.7%

    Asia-Pacific 5.2%

    Africa/Middle East 0.8%

    79 76 57 35 29

    Japan Australia 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 majority portion of the M&A pie in Latin America1

    8

    Latin America 56.6%

    Europe 18.3%

    North America 16.3%

    Asia-Pacific 7.7% Africa/Middle East

    1.0%

    Deal value* = USD443 bn

    2.4 1.4 0.6 0.1 0.03

    Israel UAE Qatar Egypt Saudi Arabia

    11.2 11.1 4.6 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

    32.8

    10.8 10.6 6.2 5.3

    France Italy Spain United Kingdom

    Luxembourg

    144.3

    55.0 39.5 25.4 17.3

    Brazil United States

    Chile Mexico Canada

    18 12 5 4 2

    UAE Israel Qatar South Africa Mauritius

    180 142 134 82 60

    Spain France United Kingdom

    Switzerland Germany

    2,054

    694 439 405 323

    Brazil United States

    Mexico Chile Canada

    *Excluding 141 deals worth USD2.2 billion for which the acquirer nation is not disclosed

    Deal volume* = 6,117

    Refer to "Sources" section for citations. 2019 includes data from January 1, 2019 to August 31, 2019

    Click for contents page

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

    0

    500

    1,000

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    70

    140

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