Mexican M&A activity remained weak in February, with any recovery later in 2021 unlikely to see the return of deals valued at over US$100mn, according to Marcela Chacón, Transactional Track Record (TTR) research and business intelligence analyst for Latin America.

“While we expect to see some growth in the number of operations after the first quarter due to restructuring processes, the sale of assets as well as company mergers, there’s no foreseeable significant growth in operations over US$100mn,” Chacón told BNamericas.

Chacón said the 4-5% GDP recovery expected for Mexico in 2021 has been coupled with global uncertainty about the future. “You might have an annual increase compared to last year’s results, but you have to take into account the environment of caution and the low growth of cross-border operations happening in recent months,” she said.

“It’s likely that growth beyond 2021 will stagnate again with great uncertainty in the outlook … And it appears this is having an impact on investor appetite for larger deals that will only start to pay off in the medium and long term.

" With respect to areas that could see some transactional activity in the next six months, Chacón said to expect deals in the telecom and energy sectors, as well as finance and insurance, “especially with acquisitions of assets in Mexico that may be taking advantage of investors with big financial muscle looking to maintain some level of interest in the region.”

February activity Mexico recorded the closing or announcing of 19 transactions – M&A, private equity, venture capital and asset acquisition – in February for a combined reported deal value of US$175mn.

Together with January’s operations, 2021 has seen 39 transactions, of which 15 reported deal value amounting to US$277mn, said TTR. The figures reflect a 31.6% decline in the number of operations recorded compared with January and February 2020, as well as a 76.0% drop in reported deal value. By industry, the tech and the finance and insurance sectors have been most active with 12 operations each.

TTR recorded six internet sector deals in the period. The research firm added that there have been eight inbound acquisitions in the tech and internet sectors – a 60% improvement year-on-year for the two-month period.

 

Source: Business News Americas / BN Americas - Chile