ECLAC highlighted that the main mergers and acquisitions carried out in Mexico by foreign companies in 2020 were concentrated in two main activities: infrastructure concessions and the pharmaceutical sector.
Mexico captured 11.864 million dollars of net inflows of Foreign Direct Investment (FDI) in the first quarter of 2021, an increase of 14.8% compared to the preliminary data for the same period of 2020.
Before, in 2020, FDI inflows to Mexico reached 31,365 million dollars, 6.6% more than in 2019, and represented 30% of the total of Latin America and the Caribbean.
In a context marked by uncertainty, mergers and acquisitions were rare last year.
Several of them consisted of a foreign company selling its operations in Mexico to another foreign investor.
Mergers and acquisitions
In April 2020, two Canadian pension fund managers, Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan, bought 40% of the construction company and manager of infrastructure concessions Impulsora del Desarrollo y el Empleo en América Latina (IDEAL) , in a transaction for 2,718 million dollars with Grupo Financiero Inbursa, belonging to the Mexican businessman Carlos Slim.
At the time of the acquisition, IDEAL operated 15 highway concessions (1,430 km), three multimodal transportation terminals and two water treatment plants, in addition to having important projects under construction such as the Las Varas-Puerto Vallarta highway, from the state of Nayarit, and Mitla-Tehuantepec, in the state of Oaxaca.
Then, in June 2020, the construction company Abertis and a Singaporean investment fund, GIC Private Limited, bought 72% of the highway operator Red de Carreteras de Occidente (RCO) for $ 1.658 billion.
Despite not being strictly FDI, since it was a transaction between foreign companies, the interest that the road infrastructure sector in Mexico is arousing among foreign investors is striking.
At the time of the transaction, RCO controlled five concessionaires totaling 876 km, which operated a network of eight highways in the central-west region. These connect the country’s main industrial corridor, El Bajío, with the two largest cities: Mexico City and Guadalajara.
In the pharmaceutical sector, in September 2020, the Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ) acquired 24% of the Mexican pharmaceutical company Laboratorios Sanfer, belonging to the American company, for 500 million dollars. General Atlantic investment company.
According to CDPQ, this operation will allow Sanfer to carry out a growth plan in Mexico and enhance its expansion in Latin America, where it has made a series of acquisitions.