LATAM sees record M&A but uncertainty remains


Financier Worldwide Magazine

June 2017 Issue

2015 saw record M&A transaction value levels of almost $5 trillion worldwide. However, in 2016, the economic uncertainty created by Brexit and the US presidential elections caused a drop in the value of transactions, with Latin American (LATAM) markets being no exception. On top of the worldwide uncertainty, the political crisis in Brazil created a downfall in LATAM transactions, with a 40 percent decrease in value compared to the previous year.

Despite global trends, M&A transactions in Argentina have increased since the election of Mauricio Macri as president in November 2015, with deals growing from 35 in 2015 ($869m total value) to 42 in 2016 ($3.1bn). Furthermore, Argentina increased its presence in LATAM’s total deals, ousting Peru and Colombia.

M&A activity in Argentina

President Macri’s free-market views, the lift in currency controls and the agreements with the holdouts help to explain the increase in M&A activity in Argentina – a favourable business environment that is starting to attract foreign investors. Countries like Spain, Mexico, Germany and the US increased their participation in the Argentine M&A market, as cross-border transactions increased by more than 100 percent compared to 2015.

The biggest transaction of 2016 was the acquisition of Petrobras Argentina S.A. by Pampa Energía S.A., the largest integrated electricity company in Argentina, for $892m. Through its subsidiaries, such as Edenor, Transba and Transener, the company participates in the generation, transmission and distribution of electricity, and is one of the industry’s leading companies. The second biggest transaction last year was the purchase of Sofora Telecomunicaciones S.A. by Fintech Group for $560m. With this acquisition, Fintech now controls 51 percent of Sofora’s shares, which in turn is the controlling shareholder of Telecom Argentina S.A., one of the main telephone companies in the country. The acquisition of Television Federal S.A. by Viacom Inc. was the third biggest transaction of 2016. Viacom, the fifth biggest media conglomerate in the world, bought the leading Argentine television station and network for $400m.

Main areas of interest

Macri’s administration has been promoting several areas with good investment prospects. One of these is renewable energy. The new government’s RenovAr programme has so far approved almost 60 projects with a total power exceeding 2423 MW, at an average price of $57.44/MWh. Most of these projects consist of wind and solar energy, although some biomass, biogas and hydropower energy projects were also approved. The two regions where these projects are located are the province of Buenos Aires and the northwestern provinces of Argentina. The investment related to the RenovAr programme projects has been estimated at $4bn, with the success of the programme credited with reactivating the selling market of renewable energy companies.

Furthermore, the increased interest in Vaca Muerta (a shale gas and oil formation located at the Neuquén Basin) boosted the oil & gas sector in 2016, with a total transaction value of $1.2bn. Vaca Muerta is estimated to contain 741 million barrels of shale oil (the fourth largest in the world) and 186 million barrels of shale gas (the second largest in the world).

In connection with the exploitation of these reserves, in January 2017, president Macri announced an agreement between the National State, the Province of Neuquén, oil companies and labour unions to promote investments estimated at $5bn. In March 2017, following the execution of the agreement, Techint Group announced an investment of $2.3bn in the production of shale gas, while Schlumberger announced an investment of $390m in association with the local YPF. Furthermore, in April 2017, Total announced that it is to invest $500m over the next four years.

The telecommunications sector also experienced growth in 2016. The selling of local companies, Telecom and Nextel, contributed to a transaction value that exceeded $1bn. Furthermore, the outsourcing of passive infrastructure, such as cell sites and towers, has made the telecommunications sector very attractive to investors. In Argentina, most of the passive infrastructure is owned by mobile network operators. In addition, the government has made cell and internet access expansion development a priority, hence the opening of a number of private investment opportunities.

The Argentine mining industry also has great potential for investments. In particular, Chile, Bolivia and Argentina form the ‘lithium triangle’, which contains 80 percent of the world’s lithium. Moreover, the demand for this mineral, which is used primarily in cellphone batteries, is increasing worldwide. However, most of Argentina’s mining areas are currently underdeveloped and are yet to be ceded to concession.


The election of Mauricio Macri as president of Argentina and the resulting more favourable business environment has increased M&A transactions in Argentina, despite global economic and geopolitical trends. Argentina has also gained a presence in the LATAM market, taking 7 percent of the deals and increasing the value of transactions by more than 250 percent, compared to 2015. Moreover, new areas of interest have emerged, such as the renewable energy sector, and other industries, including the oil & gas sector, have substantially increased their activity. This trend is expected to continue in 2017 as new deals continue to be announced.


Pablo García Morillo is a partner and Diego Giay is a senior associate at Marval O’Farrell Mairal. Mr García Morillo can be contacted on +54 11 4310 0100 or by email: Mr Giay can be contacted on +54 11 4310 0100 or by email:

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