Merger and acquisition transactions in Argentina grow by 50%
During the first three months of the year, Argentina recorded a 50% year-on-year increase in mergers and acquisitions. In total, transactions have reached $2.032 billion, according to the consultancy firm KPMG.
During the first quarter of the year, KPMG recorded a total of 20 M&A transactions. According to this report, and according to the data disclosed by the companies, the value of the transactions reached $2,032 million. The increase in operations has occurred in a context in which the sanitary restrictions imposed during the pandemic caused by the COVID-19 have decreased, which has stimulated the economy and stimulated some sectors, however, KPMG highlights that the increase in transactions is due to a "conflictive political context and a growing level of macroeconomic imbalance" in the Spanish-speaking country.
During the first few months of the year it has been technology companies that have attracted the most interest, accounting for nine of the twenty deals completed at the beginning of the year, closely followed by companies in the energy, natural resources, science and healthcare sectors.
"Transactions in the technology sector continue to drive activity, accounting for 45% of all deals. These are companies that have an export profile or a regional presence, and are attracting the interest of international players," remarked Andrea Oteiza, partner in charge of KPMG's Deal Advisory practice.
Between January and March this year, 80% of the acquisitions of Argentine companies corresponded to foreign capital buyers. "This was particularly in the technology sector because international buyers accounted for 90% of the cases. It is a change in the trend observed in 2020 and 2021 with the prominence of domestic investors." According to KPMG, the supremacy of foreign buyers is not due to a strong interest of foreign players in Argentinean companies, but to the almost complete disappearance of transactions between national players.
According to KPMG's report, it is normal for transactions in which both buyer and seller are Argentinean nationals to decline, as the level of discount rates and the characteristics of the local market lead to very low market prices for companies. This situation is often not validated by local sellers who prefer to wait for better sales conditions rather than take the risks involved in doing business in the local market
This was particularly true in the technology sector because international buyers accounted for 90% of the cases. "It is a change in the trend observed in 2020 and 2021 with the prominence of national investors," highlights Federico Díaz Ascuénaga, the head of M&A-Deal Advisory at KPMG Argentina.
For the consultancy firm KPMG Argentina there is currently a very high level of sale audits in process, therefore, it is expected that in the next quarter the number of merger or acquisition transactions of Argentinean companies by local buyers and sellers will increase significantly.
M&A activity worldwide is down 27% from the trend of the last nine months due to the uncertainty caused by Russia's invasion of Ukraine. The main reduction has been on the European continent, where activity is down 40%, with the other pole being the United States, where deals are down 10%.
Americas Coordinator: José Antonio Sierra
