Attractive valuations propping up Brazil M&A deals, bankers say
By Guillermo Parra-Bernal
SAO PAULO, April 1 (Reuters) - Mergers and acquisitions activity in Brazil had an encouraging start to the year, as buyers took advantage of a weaker currency and cheaper valuations to clinch deals in Latin America's largest economy.
Brazil's M&A deal flow remained robust despite mounting global market turmoil stemming from the Ukraine political crisis and eroding confidence in Brazil as growth slowed and inflation quickened. Concerns surrounding elections later this year helped bring buyers and sellers closer in some cases, speeding the conclusion of some transactions that had lingered on for months.
Companies announced about $14.21 billion worth of deals in Brazil during the first quarter, up from $5.12 billion a year earlier, according to a quarterly Thomson Reuters report on M&A activity released on Tuesday. About 108 deals were announced in the past three months, down from 132 in the year-earlier period.
Strategic buyers toned down their caution towards Brazil, while private-equity firms were quick to execute their takeover plans during the quarter. They are openly seeking greater exposure to Brazil based on their need to get a specific asset, and not because of the country's status as an emerging market nation with a massive consumer base, bankers said.
Bain Capital LLC, AmerisourceBergen Corp and Mexico's Grupo Financiero Inbursa SAB were among firms that raced to seal the purchase of healthcare, financial and pharmaceutical companies in the quarter, the report showed. São Paulo-based Itaú BBA topped Brazil's M&A league tables in the first quarter, after advising on 18 deals worth at least $9.451 billion.
"It was an interesting quarter, full of complex deals and more selective buyers," Fernando Iunes, global managing director for investment banking at Itaú BBA, said. "We think the second quarter will be even better."
Luiz Muniz, managing director and head of Rothschild's Latin America operations, agrees. As Brazil's October presidential election could slow activity in the second half, many companies may look to finalize their planned combinations by June. Continuación...