MERGER AND ACQUISITION
Published at: International M&A and Joint Ventures Committee Newsletter – December 2010
As expected 2010 proved to be a very wealthy year to Brazilian economy, with direct reflect into Merger and Acquisitions market. Recent researches show that the number of transactions has surpassed the record accounted in 2007 when almost 700 transactions were registered.
During 2010, without considering the month of December, 707 M&A transactions were held, representing an increase of more than 50% of the number registered during 2009.
Another relevant aspect noted in 2010 is the significant increase of acquisitions of foreign assets Brazilian companies. In 2009 Brazilian controlled companies expended approximately U$ 15 billion, whilst the expectation for 2010 is to end the year with registered cross-border transactions accounting for more than US$ 20 billion, according to official data of the Brazilian Central Bank.
As seeing 2010 was an excellent year for investments in Brazil, and for 2011 the expectations are yet to be better.
Aiming to attract investments to the World Cup to be held in 2014, Brazilian Federal Government enacted in 21 December 2010, law number 12.350 granting some tax exemptions for companies investing in infrastructure and technological projects directly relating to such sportive event.
Another issue that may have a positive impact for M&A transactions for the next year is a recent judicial decision from the Superior Court of Justice that has canceled a former decision forbidden companies to use losses perceived by its affiliated companies abroad in Brazil.
Still on tax and investment perspective another good news received by investor also in December 2010 is the decision of the administrative tax authorities enabling the use of goodwill based on future expectative of profits in M&A transactions.