Merger and acquisition activity in Brazil spikes by 50% due to large transactions

Mergers and acquisitions in Brazil have seen a significant upsurge in activity, with transactions involving Brazilian assets totaling R$145.1 billion in the current year up to June 4. This marked a substantial 50% increase compared to the corresponding period in 2024. The surge in M&A volume was driven primarily by a few multibillion-real deals that garnered significant attention in the market. However, despite the remarkable increase in transaction value, the number of deals actually decreased by 31% year over year, with a total of 255 deals recorded, according to data from Dealogic, a consultancy specializing in tracking global deals.

Notable transactions that have taken place thus far this year include the highly-publicized merger between meatpacking giants Marfrig and BRF, a substantial R$15 billion deal involving J&F, a company owned by the Batista family, reaching an agreement with Paper Excellence to acquire all shares of pulp producer Eldorado, thereby putting an end to a protracted legal dispute. Additionally, the offer by Actis and GIC to acquire shares of renewable energy company Serena (formerly Omega) via a public tender offer, as well as CDPQ’s R$10 billion acquisition of transmission lines from Equatorial, have contributed significantly to the burgeoning M&A landscape in Brazil.

Industry experts have noted a renewed interest from foreign investors in the Brazilian market, which has been attributed to the escalating trade tensions sparked by former US President Donald Trump. In light of these geopolitical developments, companies and investors are increasingly looking towards geographic diversification as a means of mitigating risks. Encouragingly, foreign players have displayed a heightened level of engagement in ongoing processes and seem to view Brazil with a more optimistic outlook than domestic investors.

Pedro Muzzi, co-head of M&A at Goldman Sachs in Brazil, emphasized that major deals are still prevalent, with foreign investors remaining active and displaying resilience in the face of local challenges. He pointed out that deals in infrastructure, energy, and natural resources sectors continue to progress steadily, with growing interest extending beyond these traditionally sought-after areas. Foreign investors remain largely unfazed by local issues and are actively pursuing opportunities in various sectors.

Moreover, there has been a notable increase in mandates for coordinating transactions, signifying a more vibrant deal environment in the country. Industry insiders have observed that M&A activity in the second quarter has remained robust, with healthy volumes and a growing pipeline of prospective deals. The recent uptick in deal values mirrors the revival of discussions that had been stalled in previous years, as more companies seek to unlock latent value in their portfolios by divesting non-core assets.

Looking ahead, industry experts anticipate the announcement of more billion-real deals throughout the year, albeit in a more dispersed manner than the concentrated burst witnessed in May. Factors such as rising M&A-related fees and a burgeoning number of mandates indicate a favorable environment for deal-making compared to previous years. As companies look to optimize their portfolios and position themselves strategically in the market, heightened foreign interest and a reinvigorated deal landscape are expected to drive increased M&A activity in Brazil in the coming months.