M&A Outlook: Brazil, Colombia, Peru Best

BY JOACHIM BAMRUD

NEW YORK -- Brazil, Colombia and Peru will likely see most merger and acquisitions activity in Latin America in the second half of the year, according to a Latin Business Chronicle roundtable of M&A experts. However, Mexico and Chile will also garner their share, while Argentina – a leading M&A market in the 1990’s -- will remain the odd man out, they point out.

Mergers and acquisitions in Latin America grew by 134 percent in the first half to $119.4 billion, according to Thomson Reuters. While Brazil dominates overall, in the first half Mexico managed to account for the highest announced value --$47.1 billion versus $44.2 billion in Brazil – thanks to a few large deals such as America Movil’s purchase of Carso Global Telecom for $27.4 billion and Heineken’s acquisition of Femsa for $7.4 billion.  

What is the outlook for the second half of 2010? What countries and what markets will drive M&A activity in Latin America? Latin Business Chronicle asked a panel of leading M&A experts at four major law firms. Our panel:

• Oliver Brahmst, Head of the Mergers and Acquisitions Practice Group for the Americas, White & Case
• Paola Lozano, Partner, Specializing in Mergers and Acquisitions and Corporate Transactions, Skadden Arps
• Michael J. McGuinness, Partner in the Mergers & Acquisitions Group of Shearman & Sterling
• Antonio Del Pino, Co-Chair of the Latin America Practice, Latham & Watkins

Shearman & Sterling and White & Case were the top US legal advisors in completed M&A deals in Latin America last year, while Skadden Arps ranked 8th in global announced M&A deals in the first quarter and Latham & Watkins ranked 10^th in global completed M&A deals, according to Thomson Reuters.

Among major Latin America deals, Brahmst has advised Brazil-based Votorantim Participações S.A. in a US$1.1 billion share exchange transaction; Brazil-based COSAN S/A Industria E Comercio in connection with its acquisition of Esso Brasileria de Petroleo Limitada for US$890 million; Votorantim Cimentos North America, Inc., one of the world’s largest cement companies, in the acquisition of 100 percent of the equity of Prestige/AB Ready Mix, LLC and Prestige Gunite Inc, two Florida-based cement companies, together with their affiliated entities for US$225 million and Consorcio Comex S.A. de C.V., Mexico's largest paint manufacturer, in its acquisition of Professional Paint, Inc, a leading manufacturer and distributor of architectural paints and coatings, from New York private equity boutique Jordan Co.

Lozano has advised Japan-based Marubeni Corporation in its approximately $1.3 billion acquisition of a 30 percent stake in two copper mining companies in Chile from Antofagasta plc; UBS Warburg LLC as sole bookrunner and joint global coordinator in the $335 million initial public offering of Grupo Aeroportuario del Sureste in Mexico and Australia-based BHP Billiton Limited in the purchase of an additional stake by Japan-based Mitsubishi in Minera Escondida in Chile.

McGuinness has advised Indústrias Romi SA, the Brazilian machine tools manufacturer, in its unsolicited offer to purchase the US company Hardinge Inc.; CSN, the Brazilian steel company, on the US law aspects of its unsolicited $5.6B offer to purchase, Cimentos de Portugal, SGPS, SA and JBS in its $2.8 billion acquisition of a majority stake and certain assets of Pilgrim’s Pride through a U.S. bankruptcy proceeding.

Del Pino recently represented a large multi-national corporation in a number of complex acquisitions and joint ventures in the Latin American banking sector and a number of private equity and hedge funds in connection with investments and exits in Argentina, Brazil, Chile, Mexico and Venezuela.

STRONGER THAN LAST YEAR

Latin Business Chronicle: How did your firm do in terms of M&A activity in Latin America the first half and how do you view the outlook in the second half?

Paola Lozano: We had high hopes.  We were clear that it was unlikely that we would see 2007 levels of M&A activity, but were very optimistic.  As we look through the first six months of the year...

Keywords: Argentina, Brazil, Chile, Colombia, Europe, Mexico, Middle East, Peru, United States