Q1 Cross-Border M&A Index: Latin American M&A Remains Active, Despite Uncertainty
Political turbulence and economic uncertainty, apprehension around the new administration in the United States as well as the triggering of Article 50 in the UK have coalesced to exert downward pressure on the M&A market globally. However, the Q1 2017 Cross-Border M&A Index by Baker McKenzie revealed that M&A in Latin America remains active.
- Total of 71 cross-border inbound deals into Latin America worth US$6.4 billion
- Total of 15 cross-border outbound deals from Latin America worth US$4.6 billion
- Intra-regional deal-making value saw a 46% increase quarter on quarter globally
- Globally, there were 1,238 cross-border deals, which worth US$331.2 billion, a 23% decrease in volume and a 16% decrease in value compared to Q4 2016
Latin America totalled 71 inbound cross-border deals valued at US$6.4 billion. The EU was the largest investor in the region both in volume of deals, 33, and value, US $2.8 billion. North America followed in volume, with 21 deals worth US$1 billion.
“M&A in Latin America remains active, despite the political and economic uncertainty. The largest number of inbound deals came from the EU and North America and the most targeted regions for outbound investment were North America and intra-regional deals", said Liliana Espinosa Reboa, regional head of M&A for Baker McKenzie in Latin America. "There are many opportunities for long-term investments and we expect M&A activity in Latin America to increase throughout the year.”
North America was the most targeted region for cross-border outbound deals from Latin America, with 7 deals worth US$2.5 billion. The second most targeted region was Latin America itself, with 5 intra-regional deals valued at US$1.7 billion.
While the political turbulence of 2016 has shown little sign of abating, deal-makers around the world seem to have taken the volatility on board. Globally there were 1,238 cross-border deals worth US$331.2bn – a fall of 18% in volume but only 3% down in value compared with Q1 2016. North America was heavily targeted with more than half of cross-regional deal-making, accounting for 206 deals worth US$120.8 billion. The EU especially focused on North America, spending US$98 billion on 118 deals. China has slowed its cross-border deal-making as its government has tightened regulations and in its place Japan has risen as the Asian cross-border M&A powerhouse.
There has been an especially large wave of M&A in the industrial sector, with volume up 2.5% year-on-year and value up 48% compared to 2015. Lastly, in February 2017 the Fraud Section of the US Department of Justice (DOJ) published its Evaluation of Corporate Compliance Programs (Evaluation Guidance), highlighting their interests in M&A due diligence, compliance effectiveness, and post-acquisition integration.
For more information on Baker McKenzie's Cross-Border M&A Index, please see: http://crossbordermaindex.bakermckenzie.com/.