The election of Mauricio Macri as President of Argentina in 2015 may promise a new economic environment for investors in the country, potentially reversing the country’s relatively low activity in mergers and acquisitions (M&As) in recent years. This article explores the changing political and economic environment in relation to M&As, and the role that the financial advisers First – winners of Business Worldwide Best M&A & Corporate Finance Advisors Award for 2016 – can offer companies looking to take advantage of those changes.

M&A Activity in Latin America

Over the past few years, the world has experienced an increasing number of M&As, reaching record levels in 2015 and on a par with the highest recorded number of deals in 2007 (Wall Street Journal, 3rd December 2015). Low-interest rates (even negative in some cases), easy access to capital and the urge to look for economies of scale in many industries – for example, the oil industry – are just some of the reasons for the rate of activity.

Argentina, the third largest economy in Latin America (LatAm), has lagged behind these global trends. In the last seven years, the country has been losing its leading role in the M&A field, making less than thirty deals per year, compared to Brazil’s 200 and Mexico’s 70. Countries like Colombia and Peru have ousted Argentina from its position in M&A rankings because of their stable economic growth and market-friendly environment.

The return of M&A’s to Argentina: new hope Business Worldwide Magazine

The winds of change – Macri raises hope

Mauricio Macri, the centre-right candidate, won the Presidential elections in 2015. Macri, the founder of the Propuesta Republicana (PRO) party and a supporter of the free market perspective, has raised hopes that the landscape of M&As in Argentina look set to change. Even before the runoff, the value of Argentina’s assets increased by more than a 30% in the financial markets. As a result, investors expect a more favorable business environment. Local players have already taken positions in strategic industries in advance of these expected changes (see table 1).

# Date Target Company Seller


Sector Bidder Deal Value (USD Mill.)
1 sep-15 Nextel Communications Argentina (49%) USA TMT Grupo Clarin             178
2 aug-15 Petroken /
Petroq. Cuyo
Hollland /


Petrochemical YPF / Flia. Sielecki             195
3 dec-15 Mastellone Hnos (30%) Argentina Food &


Arcor / Bagley              85
4 jul-15 Skanska (activos Arg.) Sweden Construction & Engineering Grupo Perez Companc               75
5 aug-15 Americas Petrogas Canada Energy Tecpetrol               63


Table 1, Source: First CFA / Mergermarket

Nevertheless, investors are pragmatic; investments will only come once the regulatory environment is perceived to be less risky. The new government is in a minority in Congress, so its capacity to negotiate and build strategic alliances will be central to altering perceptions of Argentine’s economic potential.

There are various ways the new government is sending signals to local and foreign investors. In addition to the recent elimination of currency, capital and export-import controls, Macri’s cabinet is currently working on:

  • A review of, and the transparency of, internal statistics (INDEC).
  • A new approach to current and future foreign creditors (holdouts, ICSID, IMF, and so on).
  • Pro-investment tax reforms.
  • New external financing for infrastructure investments.

Key industries for M&A

As the economy opens up, companies will seek to increase their profitability and be more competitive, which will bring more M&A deals. Some of the key sectors where increasing activity is expected are:

  • Oil & Gas: Due to significant shale oil & gas reserves, it is expected that this industry will grow ten times during the next decade. M&A: Focus on upstream and oilfield services.
  • Mining: It is a relatively new industry in Argentina, which has recently experienced significant growth. M&A: capital investments required to develop gold, silver, copper and lithium projects.
  • Agribusiness: Argentina is one of the most important and efficient global producers in the industry, but it has undergone a period of underinvestment. M&A: Investments throughout the agro-industrial value chain.
  • Banking: The Argentine financial system is strong, but compared to other countries in the region, credit penetration is still at a lower level. M&A: New products and financing structures more aligned to the actual situation and investment needs of companies.
  • Infrastructure: Argentina has the potential to capture more than US$ 150 billion for infrastructure investments. M&A: Strategic partnerships and joint ventures for renewable projects, trains, airports, highways, telecommunications and real estate.

Argentina’s undervalued companies: an opportunity for investors

It is important to consider that there is a close relationship between M&A deals and the valuation of companies. As shown in chart 2 below, the value of companies in Argentina continues to be 50% lower compared to other countries of the region. This situation – which will probably remain in the short term – will encourage financial investors and private equity (PE) investments – approximately one in four deals in LatAm involve private equity funds.

The return of M&A’s to Argentina: new hope Business Worldwide Magazine 

First’s role in M&A’s

The changing economic context will need experience and expertise to cultivate opportunities. One of the companies playing a central role in this process of change is First, a leading financial group with more than thirty years of experience in the Argentinean and Latin American markets. First has:

  • Participated in more than sixty M&A transactions.
  • Undertaken more than 500 valuations across the region in the past ten years.
  • Taken over 95 companies to the local capital markets.
  • Structured more than 1,000 series of trust securities valued at more than US$ 15 billion with an 80% market share. FIRST has been closely linked to the development of the local capital markets.
  • Advised on corporate restructuring deals worth more than US$ 2 billion.
  • Worked with more than 70% of Argentina’s top 100 domestic companies.

Investors looking to take advantage of the changing political and economic climate in Argentina need support to understand local contexts, both within Argentina and the LatAm region. As a firm whose M&A clients include Unilever, BASF, Baumgarten, Mead Johnson, ICBC, Diageo, Alicorp, Dupont, Seguridad Argentina, and Shell, First provides perspective and understanding of Argentina’s current political and economic environment and provides input on why Argentina is becoming again attractive for PE investors.



When selling a business, it is crucial for companies and shareholders to maximize deal value. Identifying and anticipating the core issues that affects a company’s value is central to maximizing that value. These aspects are particularly important to SMEs and family run businesses that face both organizational and cultural changes (management professionalization and corporate governance are two examples) when going through a growth phase in their businesses.

Argentina is moving rapidly ahead with some potentially innovative changes in politics, economy and regulation to fast track economic recovery and reduce protectionism. These reforms offer a more favourable environment for M&As, and with these new opportunities, the financial advice and expertise provided by companies like First will be crucial.