M&A: Buying into Peru

May 1, 2013

Peru was at the center of Latin America’s M&A markets in March and April, amid a quieter than expected start to the year. Latin America-targeted M&A volume was $18.2 billion in the first three months of the year, the lowest quarterly volume since 2005 and down 41% from the same period in 2012 – even though the global total was up 18%.

Growth was an important consideration for Chile’s Empresa Nacional de Telecomunicaciones (Entel), when it paid $400 million cash for Nextel’s Peruvian operations. Entel plans to reserve funds for the acquisition partly by reducing its dividend payout to 50% percent of profit, compared to levels of 80% in the past. That strategy, along with a perception that the buyer paid a high price, disappointed markets. The growth possibilities are attractive, but Entel...

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