Brazilian M&A deals jump in third quarter despite election fears
By Guillermo Parra-Bernal
SAO PAULO Oct 2 (Reuters) - Mergers and acquisitions in Brazil gained momentum in the third quarter despite rising economic and political risks, as foreign companies and private-equity firms scoured for takeover targets, hoping to tap the country's long-term potential.
Companies announced $23.26 billion worth of deals in Brazil between July 1 and Sept. 30, up 76 percent from $13.23 billion in the prior quarter, according to a preliminary Thomson Reuters report on M&A activity. About 136 deals were announced during the third quarter, up from 120 in the prior three months, a gain of 13 percent.
The surge in announcements came as tension heightened ahead of Brazil's most unpredictable presidential election in 12 years. Brazilians will cast first-round ballots on Sunday.
Speculation last month that President Dilma Rousseff could lose to a more business-friendly candidate triggered a market rally, but that began to fizzle when she overtook rivals in recent polls.
Strategic buyers brushed aside caution and raised their exposure to Brazil by acquiring specific assets or tapping an economy with a vast consumer base. Buyout firms such as GP Investments Ltd and sovereign wealth funds like Singapore's GIC were on the prowl, snapping up targets in sectors such as tourism and education.
"All players, locals or foreigners, strategic or financial, know that Brazil makes a lot of sense for their business plans," said Fernando Iunes, global managing director for investment banking at Itaú BBA.
Growing activity in deals of greater complexity like spinoffs, de-listings and debt restructurings put Credit Suisse Group AG and Itaú BBA atop the rankings in terms of value and number of deals, respectively. Bankers expect more announcements to come after the election.
Still, deal flow fell on a year-to-date basis as the impact of a recession, dwindling business confidence and political uncertainty delayed some deals. The number of transactions fell to 375 from 452 a year earlier, although total deal value rose 46 percent to $50.24 billion, the report showed. Continuación...