MEXICO – LATIN AMERICA’S second-biggest economy after Brazil, with an annual output of $875 billion – suffered a drop in GDP of 6.5% last year, its worst recession since 1932. This led to a sharp decline in M&A and IPO activity, although the debt capital markets held up. This year, the economy is rebounding strongly (the IMF estimates that it will grow by 4.5%) and investment banks report a robust pipeline of deals.
Two of the biggest M&A deals announced worldwide this year involve Mexican companies: América Móvil’s acquisition of Telmex International and Carso Global Telecom (with a combined value of $23 billion excluding debt), and Heineken’s $7.34 billion purchase of Mexican brewer Femesa Cerveza.
The combined value of América Móvil’s tender offers for Telint and Carso Global was only surpassed as the world’s largest M&A deal so far this year by Novartis’s $28.09 billion bid for Alcon, according to Dealogic. América Móvil was advised by Citi and Credit Suisse, and Femesa was advised by Allen & Co and NM Rothschild.
Equity new issuance has also revived. At the end of April, Mexican bankers breathed a sigh of relief after Chedraui, Mexico’s fourth-biggest supermarket operator, realized a $373 million IPO, bringing to an end an almost two-year hiatus of new listings.