How currencies will affect M&A in coming years?

Recent article in the Wall Street Journal says that stronger regional currencies may drive cross-boarder M&A deals. Emerging countries will play a key role as buyers.

Some Brazilian companies as Gerdau, Vale and JBS are already recognized consolidators in their industries. But this trend is just arising and many other companies should follow their steps and grow internationally.

“You should look for M&A out of economies with strong currencies, and look for bargain shopping in countries with weaker currencies,” says Daniel Katzive, a foreign-exchange strategist at Credit Suisse Group in New York.”As investors turn to emerging markets for natural resources, money has tended to flow into, rather than out of, these nations, even when their currencies are rising. Foreign direct investment in Brazil hit $62 billion this year, Dealogic data show.

Still, outbound deals are also increasing. Last week, The Wall Street Journal reported thatBrazilian meat-processing giant JBS was pursuing a takeover of American food producer Sara Lee. Since 2005, the Brazilian real has appreciated nearly 60% against the dollar, and Brazilian companies, which bought $3.7 billion in foreign assets that year, have spent $12 billion on overseas deals this year, according to Dealogic.”

Stronger Regional Currencies May Drive M&A Revival – Deal Journal – WSJ.

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About Hildete Vodopives

Hildete de Moraes Vodopives is founder of Brazil Global and of the Harvard Strategists Bureau. She is a member of the Brazilian Investment Analysts Association (APIMEC-Rio) where she served as Corporate Relations Director and later, on the board. Hildete advises companies doing business in Brazil. She lives between Paris and Rio and is a member of the Harvard Club of Paris and of the Mercosur Women’s Forum.
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