Mexico saw M&A activity decline in May, recording only 19 transactions, 21% fewer than in the same month a year before. Disclosed deal value was US$810mn or 36% less year-on-year.

M&A research firm Transactional Track Record (TTR) reported the figures, saying Mexico produced only 112 M&A transactions in the first five months of 2019, down 30% from the same period 2018, while 47 operations with disclosed deal values amounted to US$9.41bn, down 1.7%.

The figures reflect investor uncertainty over weak global growth and the escalating US-China trade war.

More bad news for Mexico arrived at the end of May, with the US threat of tariffs, although that danger has been averted for now thanks to an agreement requiring Mexico to take tough action to halt the flow of illegal migrants.

"Although, the US tariff offensive on Mexico has generated uncertainty in recent weeks, not only in the local but also in the regional market, it is far from being a devastating scenario for the M&A market,” Marcela Chacón, research and business intelligence analyst at TTR, told BNamericas.

There could even be an upside, according to Chacón, who added, “The opportunity that can be generated in the medium term by the current depreciation of the Mexican peso could maintain the investor appetite for asset purchases, acquisitions, among other operations that may facilitate competitiveness in the transaction market.”

According to TTR, the strongest sector for M&As this year has been technology with 20 operations to May, followed by the internet segment with 16 deals.

CROSS-BORDER DYNAMICS

Regarding the cross-border market, Mexican companies have shown strongest interest in Spain, producing eight operations this year, followed by the US with seven transactions, and then Colombia and Peru with three each. By amount, Brazil stands out for outbound deals at US$912mn.

Regarding inbound transactions, the US has been the most active in Mexico with 12 operations, followed by the UK with five and Spain and Japan with four each.

Spain, however, provided the source of the largest inbound deal with banking giant Santander’s announcement in April that it sought to repurchase the 25% minority stake in its Mexican subsidiary Santander México, which TTR values at US$2.94bn.

PRIVATE EQUITY AND VC

TTR reported that there were six private equity transactions in Mexico in January to May with a total value of US$33mn, down 64.7% in the number of transactions and 98.1% in value.

Venture capital also fell, with TTR reporting 27 deals in Mexico, down 12.9% from last year, with total capital raised in 14 disclosed deals 55.3% lower at US$123mn.

Source: Business News Americas / BN Americas - Chile