Brazilian Mega-Mergers On The Rise

Brazilian mega-mergers are on the rise, with deals nearly quadrupling to US$34 billion since last year, Bloomberg News reported on Monday, June 14.

Meanwhile, stock issuance by companies in Brazil leaped 83% to 69.6 reais, or US$13.6 billion, with firms raising capital in public equity markets and seeking out targets for takeover.

“Companies in Brazil are offering more shares on public markets as interest rates below inflation push many investors in search of higher yields,” stated the Bloomberg report. “At the same time, the COVID-19 pandemic has cut revenue at small firms, increasing acquisition opportunities for their bigger rivals.”

Alexandre Bertoldi, a partner at the law firm Pinheiro Neto Advogados, told Bloomberg that many companies in Brazil are flush after selling stock, and are using this as an opportunity to consolidate.

Bertoldi’s firm is one of the country’s leading advisors to companies looking to merge. It helped to oversee this year’s biggest transaction, the US$10.6 billion merger between the healthcare company Hapvida Participacoes e Investimentos SA and Notre Dame Intermedica Participacoes SA.

What’s happening in Brazil is part of a record wave of mergers and acquisitions around the world. As PYMNTS reported Brazilian mega-mergers are on the rise, this trend stems from low interest rates, rising stock prices and an uptick in interest in sectors that performed well during the COVID pandemic. $532 billion in deals were announced in May, the most ever for that month.

The total value of pending and completed deals in the first five months of the year hit $2.4 trillion, $1.3 trillion of which happened in the U.S. alone.