2007 was a banner year for mergers and acquisitions involving Mexico-based companies both as buyers and as sellers. In a favorable investment environment of steady growth, low inflation, a stable currency and ample reserves, 44 Mexico-based businesses worth $10.1 billion changed hands last year compared with 50 companies valued at $8.3 billion in 2006. As a result, average deal size involving a Mexico-based target rose from $167 million to $230 million. Industrial products and energy were the most active industries in terms of value in 2007, followed by retail, consumer products and construction.
The ongoing turmoil in the U.S. and global financial markets makes it difficult to project 2008 deal activity, given that the U.S. is Mexico’s biggest trading partner. However, many analysts believe several factors will soften the blow for the Mexican economy. These include the rising value of oil exports, over $3.5 billion in new government spending on infrastructure projects, and a recently announced $5.6 billion stimulus plan to promote productivity.
