Globally, political turbulence continues to impact international markets. However, the Baker McKenzie Cross-Border M&A Index reports stability in the value of cross-border transactions both in Latin America and internationally during the second quarter of 2017.
The report highlights that:
- There was a total of 64 cross-border transactions in Latin America totaling US$6.56 billion
- There was a slight increase in the total value of M&A transactions in Latin America compared to the previous quarter (4%)
- Brazil remains the most active M&A destination in the region, while Mexico, Peru and Argentina all recorded significant increases in the total value of M&A transactions
- North America and Europe continue to lead as M&A investors in Latin America, but there was a notable increase in investments from Asia-Pacific
- Latin American investors completed nine cross-border transactions for a total value of US$2.07 billion
- 1,368 cross-border transactions were carried out worldwide, with a total value of US$345.8 billion
During the second quarter of the year, Latin America recorded fewer total M&A transactions but a slightly higher overall deal value than in the previous quarter. The 64 cross-border transactions registered this quarter totaled US$6.56 billion. The figures represent an 18% decline in the number of deals compared to the figure recorded in the first quarter of the year (78), but a slight increase (4%) in total transactional value, which in the previous quarter was US$6.31 billion.
Latin America continues to be an attractive region for investors, especially from North America and the EU—Spain in particular.
"The consumer goods industry attracted most of the investments in terms of both number of deals and dollar value during the second quarter of the year," said Liliana Espinosa Reboa, Baker McKenzie's regional head of M&A for Latin America. "Although geopolitical uncertainty remains as a topic in the agenda of executive boards around the world, investors identify opportunities in the region, and therefore we expect to see an increasing number of M&A deals in the second half of this year."
Brazil maintained its status as the leading venue for M&A in the region, both by number of transactions and total dollar amount. During this quarter, it recorded 25 transactions totaling US $2.5 billion, almost half of the total deals registered in the region. Meanwhile, Mexico recorded a significant increase in the total value of transactions during the second quarter of the year, reaching US $ 1.55 billion, a 150% increase over the previous quarter. In Argentina, there was also a significant increase in M&A investment compared to the previous quarter (US $ 975 million vs. US $ 268 million) as in Peru (US $ 107 million vs. US $ 12 million).
The European Union led M&A investment in Latin America, with USD $ 2.42 billion in deals (vs. USD $2.9 billion in the previous quarter), originating from across the Atlantic, followed by North America, which was the source of USD $ 1.67 billion of investment (vs. US $ 1.96 billion in the previous quarter). Also of note was the increase in the total value of transactions originating from Asia-Pacific, which totaled USD $1.57 billion, 80% more than in the previous quarter (USD $875 million).
M&A in the World
The effects of political turbulence in the world have been weathered by the M&A market that remained stable during the second quarter of the year. 1,368 cross-border transactions valued at US$345.8 billion were announced, representing a 10% decrease in trading volume, but only a 1% drop in total value, compared to the figures for the first quarter of 2017.
While the European Union has regained stability following developments around Brexit and the resolution of key elections, it is reported that more than half of the total value of cross-border transactions in the world during the second quarter of 2017 was destined for this region (US$195.2 billion), as well as nearly half the volume of deals during this period (637).
The United States, China, and the United Arab Emirates led investment interest in the European Union, where there were also intra-regional transactions by companies in the United Kingdom and Italy. Seven of the countries that received the most M&A interest in the second quarter of the year are from the European Union, compared to only four in the preceding quarter.
Investors in North America carried out 364 transactions valued at US$128.9 billion.
China was the world’s second most active destination for M&A, with 94 transactions valued at US$35.9 billion following a quarter that was impacted by legislative changes in the Asia-Pacific region.
Total number of transactions increased in the technology sector during the first half of 2017 to a greater extent than in any other quarter since the first half of 2016. For the second year in a row, the United States continues to be the leading country globally for M&A activity.