Mexico: Mergers & Acquisitions: Fourth Edition - Mexico

Last Updated: 4 September 2015
Article by Daniel Del Rio and Jesús Colunga

Most Read Contributor in Mexico, December 2017


Regarding the main sources related to corporate governance in our country, the most important legal orders are the General Corporations Law (GCL), the Federal Code of Commerce, the Securities Law (SL), the Financial Institutions Law, the Mutual Funds Law and the Federal Act to Prevent and Identify Illegally-Funded Transactions and its Regulations.

The most recent legislation regarding corporate governance in Mexico was the new Securities Law (SL), which become effective in June 2006.

Moreover, it is important to note that the National Banking and Securities Commission issues securities and circulars containing provisions in corporate governance matters, which are applicable to issuers of securities in general, as well as to companies quoted on stock exchanges.

In addition, the Code for the Improvement of Corporate Practices was issued by the Mexican Business Coordination Council, which establishes the guidelines and regulations for the improvement of corporate conduct by means of enhancing corporate governance, covering the following areas: Corporate Governance; Shareholders' Meetings; Board of Directors; Audits; Evaluation and Compensation; and Finance and Planning. This code is based on principles and provisions; however, it is not mandatory.

Significant deals and highlights

During 2014, Mexico's transactional market showed that it remains strong, with positive numbers in both number of transactions and volume of investment.

Currently, the telecommunications, media and technology ("TMT") sector has continued expanding and evidently influencing cultures worldwide. The TMT sector has assumed more importance throughout the years as revolutionary technological changes are happening every day, and in recent decades humanity has witnessed remarkable developments in this respect, including the evolution of previously existing technologies and the emergence of new telecommunications and technologies, satellites, cable television, fibre optics, video cassettes, compact discs, computerised image-making and other computer and digital technology, among others.

According to a study by the firm Transactional Track Record (TTR), between April and June 2014 there was an annual increase of 24.4% in the number of mergers and acquisitions, including those announced and closed, going from 34 in the second quarter of 2013 to 45 in the same period this year.

Regarding investment volume, the amount registered between April and June has been put at US$ 13,578m, a lower amount in comparison to the US$ 28,143m reported in the same period of 2013, although it is important to take into consideration that during 2013 the transaction of Grupo Modelo was signed for the amount of US$ 20,100m, which may be a reason for this difference.

Among the most important transactions carried out during the second quarter was the sale by AT&T of 7.18% of America Movil to Inmobiliaria Carso and Controladora Empresarial de Capitales, Mexican companies owned by Carlos Slim, for about US$ 5,900m.

Another important transaction during 2014 was the purchase of Consorcio Comex by the US Company PGG Industries, for an amount of US$ 2,300m.

During 2014, the internet and TMT sectors have continued to be the most active sectors, with more transactions during both the second quarter and third quarters of the year.

In this sector, it is important to highlight the purchase by Grupo Salinas of 50% of the capital stock of Iusacell, which was formerly owned by Televisa, for the amount of US$ 717m.

Food and beverage is also among the most significant sectors, which includes the purchase of Bread Canada by Grupo Bimbo, for the amount of about US$ 1,678.75m.

The other sectors most likely to engage in M&As are the financial, banking and insurance sectors, as well as automotive, manufacturing companies, industrial and health services industries.

Like in 2013, the growth of the mining industry remains active during 2014. Finally, the energy sector is an industry that could potentially be benefited by the structural reforms of Mexico's Congress. On the other hand, while oil is subject to short-term price fluctuations, global consumption is expected to grow in the long term, as well as its industrial use.

The field of private equity and venture capital funds continues to gain importance in total mergers and acquisitions in Mexico, representing 15.5% of total M&As recorded during the second quarter of the year. Up to this date, such amount has increased to 23.4%.

The total amount invested in mergers and acquisitions in Mexico was US$ 6,700.37m in the third quarter of 2014, which represents 25.9% higher than the amount recorded in the same period of 2013, of US$ 5,318.20m.

Moreover, it is noteworthy to mention that from July to September 2014, the reforms recently undertaken by the Mexican government continue encouraging the transactional market. In the third quarter of the year, the number of mergers and acquisitions in Mexico increased by 45.3% in comparison to the same quarter of 2013. During July to September of this year, 77 transactions took place, which outnumber those carried out during the same period of 2013, when there were 53 operations.

On the other hand, it is important to mention that the capital market in Mexico ended with inactivity in the second quarter of 2014, and the first flotation on the stock market of the year was held, conducted by the investment fund in real estate Fibra Prologis, for an amount of US$ 664.52m. Fibra Uno and Alsea concluded two capital increases.

Regarding Latin America, Mexico is the country with the second-highest activity in terms of mergers and acquisitions with a total of US$ 13.577m, just after Brazil which reported activity in the total amount of US$ 21.822m in the second quarter of 2014.

Key developments

New Amparo Law

On April 2, 2013, there was published in the Federal Official Gazette the new Amparo Law, Implementing Articles 103 and 107 of Mexico's Federal Constitution, thereby repealing the former Amparo Law. (In Mexico, amparo is an effective and inexpensive instrument for the protection of individual rights.) Pursuant to the first transitory article, the new law became effective the day following its publication, that is, April 3, 2013.

Some of the most relevant aspects of the new law are the follow ing:

1. Human rights have been added as a matter to be protected in an amparo action, in line with the recent constitutional amendments.

2. A "legitimate interest" is now the basis for a petitioner to file an amparo action, increasing the possibility of becoming a party thereto and without the need of showing direct damage to any substantive right.

3. Actions by private parties may now be contested in an amparo action, provided such actions are tantamount to acts of authority under a statute.

4. The electronic filing and processing of an amparo action are now permitted.

5. A new type of amparo action, called "amparo adhesivo" (supporting amparo action) has been introduced.

6. A general declaration of unconstitutionality of statutes, except for tax regulations, as well as fast-track for amparo actions in urgent cases, are now contemplated.

7. No stay pending a final decision on an amparo action may be granted, when preventing the government from using or exploiting any federal public property covered by Article 27 of the Mexico's Federal Constitution.

8. Circuit en banc courts (plenos de circuito) have been created and empowered to decide on conflicting opinions issued by courts in their circuits.

The new Amparo Law concludes the implementation of the June 2011 constitutional amendments, which recognised the human rights covered by the international treaties of which Mexico is a member.

Insurance and Surety Companies Law

On April 4, 2013 the Federal Official Gazette published an executive order issuing the Insurance and Surety Companies Law. The Insurance and Surety Companies Law will come into full force and effect in two years, calculated from the date of the publication, and repeals the Mutual Insurance and Insurance Companies Law and the Federal Surety Companies Law in their entirety. The purpose of this law is to govern the incorporation and operation of insurance, surety, and mutual insurance companies, as well as the activities and transactions that they are allowed to carry out.

Telecommunications and antitrust

The Reform in Telecommunications, Radio Broadcasting and Antitrust matters was proposed on March 12, 2013 by the Federal Government and the coordinators of several political parties. It is intended to strengthen the rights related to freedom of expression and information; to adopt measures in order to encourage competition in open and pay television, radio, mobile and fixed telephony, data and telecommunications services in general; to ensure effective competition in all sectors; and to create conditions to increase substantially the telecommunication infrastructure and the obligation to make its use more efficient, which has a direct impact on the lowering of prices and increase of service quality.

On June 11, 2013 the Federal Official Gazette published the Executive Order Amending Articles 6, 7, 27, 28, 73, 78, 94, and 105 of the Mexican Federal Constitution in the Area of Telecommunications, which amends various constitutional provisions.

Moreover, this reform includes the State's obligation to ensure access to information and communication technologies, as well as broadcasting and telecommunications services, including broadband and internet. It also creates the Federal Telecommunications Institute (IFETEL) as an independent constitutional body, for the efficient development of broadcasting and telecommunications, whose duties shall be the regulation, promotion and supervision of the use, development and exploitation of radio spectrum, networks and the provision of broadcasting and telecommunication services, as well as access to active and passive infrastructure, and other essential inputs, entitling this institute to grant, revoke and authorise concessions and granting it authority in economic competition matters regarding broadcasting and telecommunications sectors.

Federal Act to Prevent and Identify Illegally-Funded Transactions and its regulations

On August 16, 2013, the Federal Official Gazette published the Regulations to the Federal Act to Prevent and Identify Illegally-Funded Transactions.

The purpose of this law is to protect the financial system and the economy of the country by providing means and procedures to detect and prevent activities or transactions involving illegally-obtained funds. The financial structures of criminal organisations are also targeted in order to avoid their being operated with illegal resources.

The Act also imposes several obligations on corporations and particulars. One of these obligations is the registration and filing of operation notices for carrying out activities considered as vulnerable in terms of the law, carried out since September 2013. A great number of commercial activities such as gaming and sweepstakes, draws, issuing of credit and prepaid cards, traveller's checks, construction services, buying and selling of precious metals and jewellery, art, vehicles, donations received by not-for-profit organisations, transport of values, professional services, foreign commerce services, leases and other activities are now subject to new restrictions and limitations that must be fulfilled so as to avoid a possible sanction.

On July 24, 2014, the agreement 09/2014, which amends the general rules that refer to the Federal Act to Prevent and Identify Illegally-Funded Transactions, was published in the Federal Official Gazette.

This agreement increases some of the definitions, establishes a procedure by virtue of which notifications will be considered to be effective, empowers the Tax Administration Service to require information and documents regarding registration and notices of those who carry out vulnerable activities, and simplifies the identification of clients for some vulnerable activities.

This agreement incorporates Article 27 bis, which establishes various exceptions with respect to the obligation to give notice for certain vulnerable activities.

Tax reform

After obtaining the opinion of the Commission of Finance and Public Credit, in October, 2013, Congress approved the economic package proposed by President Enrique Peña Nieto on September 8. This package includes substantial amendments to various tax laws including the repeal of the tax deposits in cash and the single rate business tax, as well as new provisions regarding value-added tax, special tax on production and services, federal fee law, income tax, etc.

Constitutional reform to the energy and electric sectors

On December 12, 2013, the Mexican Congress approved amendments to Articles 25, 27 and 28 of the Mexican Constitution to allow private investment in the oil and hydrocarbon industry, as well as activities related to the electricity industry.

On December 20, 2013, an executive order was published in the Federal Official Gazette amending and supplementing Articles 25, 27 and 28 of Mexico's Federal Constitution in this regard, as well as electricity matters. The Executive Order became effective the date following its publication; thus, as of December 21, 2013, the federal Congress will have several terms to adapt the legal framework on oil, hydrocarbon and electricity matters, as well as issue supplemental laws and create public entities.

Due to the foregoing, in future years it is envisioned that foreign investment will increase in this sector, allowing international companies to incorporate subsidiaries in Mexico.

Financial reform

On January 10, 2014, the Federal Official Gazette published the Financial Reform. Several statutes were amended and a new Act to regulate financial institutions was issued. The most relevant aspects of 2014 Financial Reform are as follows:

a) Promulgation of a new Act to regulate financial institutions, which purpose is to strengthen the corporate governance of holding companies.

b) Strengthening of the National Financial Services Users Protection Commission ("Condusef").

c) Multiple-purpose financial institutions ("SOFOMES") and general deposit warehouses.

d) Development Banking System: the financial reform has as another objective, to make the legal framework governing the Development Bank more flexible.

e) Several provisions of the Community Savings and Loan Act and Cooperative Savings and Loan Associations Act are amended or repealed.

f) The financial reform removes limits to foreign investment in financial institutions.

New Federal Competition Law of Mexico

A new Federal Economic Competition Act was published on May 23, 2014 in the Federal Official Gazette, to enter into force on July 7, 2014. This new law resulted from the bill submitted by the President of Mexico in February 2014 and from all amendments and additions to the bill that were approved by the Senate and the Chamber of Deputies.

The new law arises from the June 2013 amendments to Article 28 of the Mexican Constitution that had, as their, specific purpose, to create both the Federal Economic Competition Commission ("COFECE" − Comisión Federal de Competencia Económica) and the Federal Telecommunications Institute ("IFT" − Instituto Federal de Telecomunicaciones) as constitutionally autonomous agencies independent from the executive branch, and to set their basic organisation and operating principles.

As a result of the foregoing, most of the changes in the new law specifically deal with the organisation, powers and composition of the COFECE. As regards its substantive or underlying aspects, the new law essentially continues the framework of the repealed law concerning the analysis and management of monopolistic practices, with the addition of new concepts such as barriers to competition and access to essential raw materials.

The new law also incorporates innovative procedures, including procedures to analyse and regulate barriers to competition and access to essential raw materials, and amends the rules to process the issuing of opinions and investigations. In this latter case, this is with the specific intention of conforming to the principle of impartiality in decision making as set forth in Article 28 of the Mexican Constitution. Finally, several aspects formerly in effect at the regulatory level are now raised to the statutory le vel.

New Federal Law on Telecommunications and Broadcasting

On July 14, 2014 the Federal Official Gazette published the Federal Law of Telecommunications and Broadcasting, after the passage on Thursday, July 10, of a new law by the Federal Congress.

The purpose of the new law is to regulate the use of radio spectrum, public telecommunications networks, orbital resources, satellite communication, the provision of public telecommunications service, the broadcasting rights of users, and the process of free competition in these sectors.

The most important points to highlight in this new legislation are:

a) Federal Institute of Telecommunications ("FIT"). It will be the regulator of the entire sector, grant concessions, issue declarations of dominance and have the authority to oversee audiovisual content.

b) Dominance. The FIT may declare that a company is dominant by sector and not by the services it provides.

c) Interconnection Fees. The FIT will determine whether a company is dominant in some sectors, and may impose measures to restrict its market control.

d) New Television Networks. The state will invite tenders for two new television networks concessions.

e) Digital Television. December 31, 2015 was established as the deadline to complete the transition from analogue to digital television.

f) Failure to Comply and Penalties. The legislation establishes the types of noncompliance by concessionaire, and who has the jurisdiction to impose the appropriate sanctions. Among them are the Consumer Protection Agency, Mexico's Department of the Interior, and the Federal Institute of Telecommunications.

g) Intervention and Geolocation. This established that private communications may be intercepted for public security and investigations by the authorities, and the application of similar security measures.

Amendments to the General Corporations Law, Code of Commerce, Law of General Negotiable Instruments and Credit Operations, Investment Funds Law, Federal Governmental Fees and Charges Law, and the Federal Government Organisation Law

On June 13, 2014, several amendments were published in the Federal Official Gazette in regard to the General Corporations Law, Federal Code of Commerce, Law of General Negotiable Instruments and Credit Operations, Investment Funds Law, Federal Governmental Fees and Charges Law, and the Federal Government Organisation Law.

Code of Commerce

The most important points to highlight in these new reforms of the Code of Commerce are as follows:

a) Publication of commercial status: The obligation for merchants to publish their commercial status in the newspaper was deleted.

b) Publications of several commercial acts by means of an electronic system: Before this reform, the publication of several commercial acts should be made by means of the Public Registry of Commerce. However, now such publications shall be made by an electronic system to be developed and implemented by the Ministry of Economy.

General Corporation Law

The most important points to highlight in these new reforms of the GLC are as follows:

a) The GLC now authorises companies to establish in their bylaws any provisions regarding puts, calls, drag-along and tag-along agreements, transfer and ownership rights, sale rights as well as the right to exercise pre-emptive rights different from those established under such legislation.

b) Benefit to minority shareholders by reducing the minimum percentage required for the exercise of certain rights, such as the right to delay meetings and the right to exercise actions against the directors of a company, from 33% to 25% of the capital stock.

c) A new electronic system in order to register and publish certain legal acts, including publication of notices to call General Shareholders' Meetings; publication of extracts of the spin-off resolutions; publication of merger agreements; and publication of final balance sheets in case of company liquidation.

d) The Ministry of Economy, which is the entity appointed for the creation and implementation of such electronic system mentioned above, has a term of one year following the publication of this reform to initiate the operation of such electronic publication system.

General Negotiable Instruments and Credit Operations Law

The most important points to highlight in the new reforms of this law are as follows:

a) Trusts related to personal property are enforceable against third parties, as of the moment in which the same are registered at the Single Registry of Guaranties over personal property (or RUG by its initials in Spanish).

b) The parties in a guarantee trust may agree among themselves who will be responsible for damages, loss, or impairment of the trust assets, regardless of who holds the possession of same.

c) Non-possessory pledges and guaranty trust agreements shall be valid upon execution, and the invalidity of any provision of the same shall not invalidate the entire pledge or trust.

Investment Funds Law

As a result of the implementation of the electronic system for publications entrusted to the Ministry of Economy, this law revokes the exception related to the publication of financial statements of investment fund operating companies, investment fund share distributing companies and share appraisal companies in the Federal Official Gazette.

Federal Governmental Fees and Charges Law

The payment obligations for late filings of the following notices are deleted: (i) liquidation, merger or spin-off companies; (ii) use of permit for the incorporation of companies or associations and changes of corporate name or purpose; and (iii) modification of a foreigners' exclusion clause to a foreigners' admission clause.

Federal Government Organisation Law

The Ministry of Economy is expressly authorised to carry out the operation of the electronic system in which the publications in accordance with the commercial laws should be conducted.

Industry sector focus

a) Renewable energy industry: Up to 2012, Mexico had an installed effective capacity to generate 63,195 MW of electricity, of which 14,501 MW came from renewable sources (wind, solar, hydraulic, and geothermal and biomass). This accounts for 23% of total installed capacity according to ProMéxico's estimates using data from the Energy Regulatory Commission (CRE) and the Federal Electricity Commission (CFE).

It is estimated that by 2026 the installed capacity to generate electricity from renewable sources will increase by 20,544 MW and that wind and hydraulic sources will have the largest share, with 58.6% and 27.3%, respectively. This projection includes the modalities of public service, self-supply and distributed generation.

b) Aerospace industry: According to reports of the Department of Economy, Mexico has consolidated its position as a global leader in the aerospace sector. The country's exports amounted to $5.04bn in 2012, and recorded an annual average growth between 2006 and 2012 that exceeded 16%. Imports, meanwhile, topped $4.359bn, sustaining a positive trade balance for Mexico throughout 2012. Due to its geographic location, Mexico is the meeting point of the world's two main aerospace manufacturing corridors, both in North America. Mexico's access to the Asian and European markets makes it the aerospace logistics and manufacturing centre of the Americas.

c) Processed foods industry: The processed food industry in Mexico has reported significant growth in recent years, mainly due to its productivity and input availability, as well as the country's macroeconomic solidity, competitiveness to attract foreign investment and capacity to be an export platform to more than 40 countries with which it has trade agreements. In 2012, Mexico's processed food industry produced $123.954bn, which represented 23.2% of the country's manufacturing GDP and 4.1% of its total GDP.

d) Automotive and auto parts industry: Mexico is a producer of vehicles of great quality and innovation. Vehicles made in Mexico comply with high standards and are sold in the most demanding and competitive international markets. In 2012, the terminal automotive industry grew in three significant areas: the domestic market, exports and production. That year, the automotive industry accounted for approximately 4% of the country's GDP and 20% of its manufacturing GDP. The auto parts industry in Mexico follows the same trend as the automotive industry as a whole. This has a positive effect: during 2012, light vehicle production hit a new record at 2.8 million units, 12.7% higher than 2011, increasing the levels of demand for components from auto parts companies.

e) Electrical industry: Mexico is the leading producer in the electrical industry in Latin America, ranking as one of the main investment destinations. Furthermore, Mexico is the leading supplier to the US market of electricity generation products and distribution equipment.

The industry has strengthened over time. In 2012, its total production reached $28.843bn, of which 54.2% was concentrated in the wiring, cabling and battery segment; 26.8% in electricity distribution and control equipment; and 19.0% in production of electric motors and generators.

f) Health services industry: According to PROMEXICO (the Mexican Government institution in charge of strengthening Mexico's participation in the international economy), through Mexico's National Accounting System, INEGI, it is estimated that this sector in Mexico produced $8.05bn in 2012 from medical device production in our country.

g) Pharmaceutical industry: It is estimated that the industry in Mexico produced $10.757bn in 2012. Mexico's strengths in this industry are its low manufacturing costs (18.6% lower compared to the United States), as well as its location, which enables considerable savings in logistics and close monitoring of the manufacturing process; facilitates plant inspection by health authorities; and allows rapid response to sudden changes in demand trends.

h) Telecommunications, media and technology: This sector has expanded and evidently influences cultures worldwide. The TMT sector has gained more importance over the years since revolutionary technological changes are happening every day in this respect, including the evolution of previously existing technologies and the emergence of new telecommunications and technologies, satellites, cable television, fibre optics, video cassettes, compact disc, computerised image-making and other computer and digital technology, among others.

The year ahead

As in 2014, Mexico is expected to be an important location for mergers and acquisitions during 2015. Structural reforms recently adopted in Mexico have led to a growing interest in the corporate world in participating directly via mergers and acquisitions.

According to diverse expert opinions, an improvement in the global economy and large corporate cash reserves contributed to a 26% increase in the value of M&A transactions announced between January and June 2014, However, despite this increase, the number of sale transactions actually closed fell by 2% in the same period.

The only sectors that have not shown double-digit increases in the last 12 months were retail and consumer staples.

Due to the approval of the energy reform at the end of 2013, the greatest focus of attention will still be on the clean energy sector (mainly wind, solar, geothermal and biogas). This is due to the fact that companies in the United States, Japan and Europe have expressed interest in finding partners for conversion projects in power generation plants. Other strongest expectations exist in the telecommunications and services sectors.

In 2015, it is expected that the largest worldwide corporate groups will continue to show greater interest in M&A transactions in our country.

Notwithstanding the globalised markets scenario and the worldwide current economic downturn, Mexico continues to be an attractive location for investment and commercial transactions. M&A activity has maintained a great level and it is likely that it will continue in such a manner for this coming year.

Despite any negative predictions, Mexico remains a resilient investment market and maintains a solid position as one of the main investment destinations in Latin America. Moreover, since our country has a close commercial relationship with the United States, it is expected that many investors will continue to invest in Mexico on an ongoing basis.

Without a doubt, nowadays there is a wide range of opportunities around M&A, since many foreign companies are looking to invest in Mexico, and Mexican companies continue expanding abroad as well. Due to the foregoing, the positive outlook in terms of M&A in Mexico continues growing.

In Mexico, the expectations of company sale and purchase transactions, both announced and effectively closed, are high. As previously mentioned, structural reforms recently adopted in Mexico have led to a growing interest in worldwide corporations participating directly through partnership schemes or by means of mergers and acquisitions in various sectors of the country.

Therefore we anticipate a significant increase in both volume and value of domestic transactions, particularly in the energy and infrastructure sectors as well as in the financial, healthcare, real estate and consumption industries.

Previously published by Global Legal Group Ltd

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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