05 July 2013

H1 2013 snapshot: South and Central America

Mergers and acquisitions (M&A) targeting companies in South and Central America continued to slide during the first half of 2013, with volume and value falling to their lowest level since H2 2005 and H1 2006, respectively, according to Zephyr, the M&A database published by Bureau van Dijk.

There were 1,010 deals worth USD 85,601 million in H1 2013, compared to 1,177 transactions totalling USD 214,396 million in H2 2012. While volume fell back 14 per cent over the six months, value was stripped away at a faster rate of 60 per cent and ended two consecutive periods of growth (H1 2012: USD 135,918 million; H2 2011: USD 112,908 million).

Brazilian M&A dealmaking was the main driver behind the H1 2013 results with 275 transactions worth a combined USD 23,717 million, representing 27 per cent and 28 per cent of South and Central America’s total volume and value, respectively. However, volume was down by a fifth on the comparable period in 2012 and at the lowest level since 266 deals in H1 2010.

Similarly, value reached a nadir not recorded since H2 2006 when there were just USD 11,322 million announced transactions. It is worth noting that while M&A value was stripped away from Brazil, companies based in countries such as Panama, Peru, Nicaragua, Bolivia and Paraguay, among others, benefitted from increased investment year-on-year but the uptick was not enough to advance the overall figure.

Unsurprisingly, the largest South and Central America deal by value in H1 2013 involved a Brazilian target; JBS bought local processed meat, pork, and poultry products manufacturer Seara Alimentos and Zenda Leather, a Uruguayan leather tanning company, from Marfrig for an aggregate consideration of USD 2,738 million.

It was one of 12 South and Central American deals worth more than USD 1,000 million in the six months under review, the second biggest of which also involved Brazilian companies as Kroton Educacional bought university operator Anhanguera Educacional Participações for USD 2,498 million in a tie-up that is expected to pave the way for a domestic education giant with combined annual gross revenues of USD 2,100 million. Putting these deals into a global context, the JBS acquisition was the 68th largest by value in H1 2013 and the Kroton purchase ranked 78th, according to Zephyr.

© Zephyr