Mexico Amends Key Government Procurement Law

Based on article in Latin American Law & Business Report
published by WorldTrade Executive, Inc,

Original Article Written by
By Alejandro López-Velarde (López Velarde, Wilson, Abogados, S.C.) and Regina Kuchle (AstraZeneca)

The following is an editor's summary:

The Mexican government amended a key government procurement law in July known as the Public Acquisitions and Service Law. The most important State monopolies and health institutions such as Pemex, the Federal Electricity Commission, the Social Security Institute are governed by the law, and it governs approximately 42% of the federal budget.

The law allows the federal executive to issue guidelines and regulations to change the current structure of acquisitions, leases and services. Public entitites will be able to request from otential suppliers a "Reverse Auction, in order to obtain a lower price. The executive needs to publish a Reverse Auction Methodology in the Official Gazette.

There is some worry that these procedures may not be Constitutional.

Latin American M&A Survey

Excerpt from Venture Equity Latin America
Published by WorldTrade Executive, Inc.

By Law Firm of Greenberg Traurig in association with mergermarket

Greenberg Traurig commissioned mergermarket to conduct a study of Latin American M&A activity. In Q1 2008, mergermarket interviewed 109 investment bankers, private equity practitioners and corporate executives regarding their opinions on the opportunities and challenges of the Latin American M&A market. All results were anonymous and are presented in aggregate.

Survey findings

Over three quarters of respondents expect overall Latin American M&A levels to rise in 2008
What do you expect to happen to the level of M&A within the Latin American region for 2008?

• Respondents appear to be bullish regarding anticipated overall M&A activity in 2008 within the Latin American region. A significant 60% of respondents expect activity to increase, while 16% anticipate a significant increase with a corporate respondent qualifying this viewpoint by commenting: “I believe that in general there will be a large influx of international interest which will trigger local interest. M&A looks set to increase as a result.”

• One fifth of respondents believe Latin American M&A activity will stay at current levels with one respondent noting: “I expect the level of M&A within the Latin American region to be the same as 2007 as there have been no major political or economic changes.” Notably, only 4% expect M&A activity to fall in 2008.

85% predict an increase in inbound cross-border M&A into Latin America

What do you expect to happen to the level of incoming crossborder M&A into Latin America for 2008?

• A resounding 85% of respondents believe that incoming cross-border M&A in Latin America will either increase (65%) or increase greatly (20%) in 2008. Indeed, one private equity respondent anticipates there to be significant inbound activity in Latin America as well as in other emerging markets, explaining: “We have raised a fair amount of money in our fund geared at emerging markets. We have already done one deal in Mexico and are looking for opportunities all across Latin America. I expect there to be some M&A activity between local banks in Latin America and multinationals from the USA and Europe.” Moreover, other respondents claimed that increased economic and political stability will result in greater levels of foreign investment.

• Elsewhere, 12% of respondents believe the level of inbound cross-border M&A activity will remain the same while remarkably only 3% foresee a decrease.

Brazil and Mexico are tipped to see the most significant M&A activity in the region

What countries or regions do you expect to see the highest levels of inbound M&A activity?

• Brazil (86%) and Mexico (70%) emerged as the two territories in which the clear majority of respondents expect to witness the most significant levels of inbound M&A in Latin America. Respondents alluded to Brazil’s rapid growth driving M&A, while one corporate respondent noted that Mexico has several attractive qualities commenting: “The country has good potential for FDI due to its close proximity to the United States. Carlos Slim recently spoke about a Mexican Silicon Valley being developed in the state of Senora and this could develop into a hotspot for M&A.”

• Elsewhere, Argentina (41%), Chile (29%) and Central America (25%) were also cited by more than a quarter of respondents. Given their historic low levels of M&A activity, it is somewhat unsurprising that Venezuela, the Dominican Republic and Puerto Rico are considered unlikely to see significant inbound M&A activity in 2008.

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