M&A activity in Mexico slowed in April with 17 deals recorded, nine of which reported deal values totaling US$463mn ­ a 10.5% drop in the number of deals from April 2017 and a 45.3% decline in total reported values, according to research firm Transactional Track Record (TTR).

Despite the weaker showing in April, Mexican M&A activity in the first four months of the year continues to show solid growth against the same period of 2017, recording 103 transactions (+22.6% y­o­y), 41 of which reported a total of US$5.17bn (+9.2% y­o­y).

The positive development reflects the strong differences in the business climate between early 2017 and early 2018, with optimism surrounding Nafta renegotiations and investor concerns apparently contained around July's presidential election in Mexico.

April, nevertheless, brought resurgent uncertainty, with hopes around a pre­election Nafta deal fading, and building friction between business leaders and frontrunner presidential candidate Andrés Manuel López Obrador ­ all of which contributed to peso depreciation towards the second half of the month.

Deal dynamics

TTR reported that of the 41 transactions in the first four months that disclosed deal value, 31 were small­market operations valued at less than US$100mn, eight were mid­market (between US$100mn and US$500mn), and only two operations in the period were valued at more than US$500mn, neither of which occurred in April.

With respect to cross­border activity, outbound M&A deals from Mexico in the first four months were principally directed at the US, Argentina and Brazil, resulting in eight, five and four deals, respectively. Reported values for outbound deals were highest in the US, totaling US$243mn.

Spanish firms targeted Mexican properties in 25 inbound deals in the same period, more than any other country, said TTR. However, the US, generating a total of 16 inbound deals, achieved the highest disclosed deal value of any country with US$1.52bn. TTR added there were four inbound deals from France in January­April.

Private equity and VC

TTR said there had been 10 private equity deals with Mexican firms from January to April, unchanged in activity from a year before.

There were, however, 24 venture capital deals in the period, an 85% increase y­o­y, with 11 of the VC deals reporting total capital of US$193mn (+4.4% y­o­y).

Source: Business News Americas / BN Americas - Chile