The market for M&A in Costa Rica in 2019 was very active with a high volume of transactions and some notable deals. This trend expected to continue into 2020 with increased M&A activity, despite the backdrop of lower economic growth in the country.

The M&A market in Costa Rica in 2019 was characterized by a large volume of deals and a number of high profile situations. Some notable transactions announced in 2019 include:

  • Sale of Industrias Bioquim to UPL Limited
  • FIFCO’s sale of its milk operations to Grupo Lala
  • Sale of Peri, Súper Compro y Saretto supermarkets to the Yan Family
  • Acquisition of Hospital Metropolitano and Medismart by US hospitals group Sanford Health
  • Laboratorios Stein sold part of its pharmaceutical business to Eurofarma of Brazil

Many deals involved an international buyer as more and more multinational companies look for acquisition targets in this region. The continued attractiveness of Costa Rica as a destination for foreign direct investment (FDI) is a factor in this. Sectors such as healthcare, tourism and consumer products were among the most active in 2019.

The year was also characterized by the controversional decision of local competition regulator Coprocom to formally reject Walmart’s proposed acquisition of Gessa at the start of the year. This caused a lively discussion about the role of Coprocom in the local M&A market and some concern among investors about the nature of Coprocom’s approval process.

The outlook for M&A in Costa Rica in 2020 is strong. The drivers of this trend include:

  1. Competitive markets driving consolidation among local players seeking growth
  2. Multinational groups looking to enter or expand in Costa Rica by acquiring high quality established local players
  3. Costa Rica’s continued attractiveness for foreign direct investment, especiually in light of recent instability in some other Latin American markets, e.g. Chile
  4. Lower interest rates and lower growth in key global markets, e.g. US, driving renewed interest from investors in emerging markets

Theodore Mills, Managing Director, Valeo Capital Partners commented: “There was a large volume of M&A activity in 2019 among companies in Costa Rica. It was probably a record year in terms of number of transactions. Changes in the tax code that came into effect at the start of July was a key catalyst, as well as other longer term trends. We see another strong year ahead in 2020 as local businesses increasingly see M&A as a powerful tool for creating value and achieving their strategic goals. Cross-border activity continues to weigh heavilty in the overall mix as international investors become more and more experienced acquiring companies in Costa Rica.”