Marketplace uncertainty took a toll on Mexican M&A activity in 2017, as the total value reported in 144 deals came to US$18.3bn, reflecting a 40.1% drop from disclosed values in 2016, according to data from research firm Transactional Track Record (TTR).

Mexico operated under an air of uncertainty throughout 2017, with investors concerned over the future of the nation's trade relationship with the US amid delicate and often­shaky Nafta renegotiations.

Bundling in deals for which no value was disclosed, there were a total of 302 M&A transactions in Mexico last year, only 0.33% less than in 2016.

"[The disclosed total value] this year in the M&A market is the lowest figure since 2013, despite the fact that there were almost the same number of operations with respect to 2016," said Marcela Chacón, a research and business intelligence analyst for TTR in an email to BNamericas. 

She noted that one of the main factors contributing to the result was the election of US President Donald Trump and the measures he could push through, particularly with regard to Nafta, "which slowed the M&A market in Mexico to some extent."

Chacón added that another key factor in the low figure is that 2017 lacked any major transactions on the scale of department store retailer Puerto de Liverpool's acquisition of Suburbia in 2016, which was valued at near US$1bn, among other "mega­operations" that led to solid yearlong activity in 2016.

Overall, the TTR data suggests that decision makers continued to carry out transactions in 2017, though opting for deals on the table with lower price tags.

That trend, which was somewhat indicative of the entire region last year, was even more pronounced in Mexico in the fourth quarter. TTR reported 81 M&A operations in 4Q17 for Mexico, of which 46 disclosed deal values totaling US$5.3bn, reflecting a 3.6% drop in the number of transactions and a hefty 54.2% decrease in reported values.

TTR noted that the strongest activity in 2017 came from the finance and insurance sector, which generated 57 deals last year, followed by the food and beverage industry with 42 and then internet firms with 22.

Mexican firms looking abroad primarily targeted US assets, carrying out 16 deals there last year, followed by Spain with nine transactions and Colombia with eight. However, in terms of capital moved last year. The largest outbound deals went to the US (US$2.68bn) and Brazil (US$1.56bn).

Looking at inbound deals, US and Spanish firms showed the most interest in Mexican assets, completing 43 and 18 deals in Mexico, respectively, last year.

PRIVATE EQUITY AND VC STRONGER

TTR data suggested that both private equity and VC deals countered the M&A trend last year.

In 2017, there were a total of 42 private equity transactions, of which 14 reported a combined total of US$3.02bn, a 27% increase on such operations recorded in 2016.

Mexico also saw 47 VC deals last year, of which 24 reported capital totaling US$387mn. These figures represent an increase of 21% year­on­year in the number of transactions and a 113% hike in reported capital.

Source: Business News Americas / BN Americas - Chile