Volatile Peso Creates Winners and Losers in Mexico M&A Deals

The weak peso is complicating transactions involving Mexican companies, driving up prices in local currency for acquisitions abroad or creating an unforeseen bargain for a foreign buyer, with at least one deal being revalued to adjust for the changes.

When Mexico City-based Coca-Cola Femsa SAB agreed, with partner Coca-Cola Co., to acquire the AdeS soy-based beverage business from London-based Unilever NV for $575 million in June, the deal was valued at 10.6 billion pesos. Now the peso-denominated cost is about 9 percent higher. Like other Mexican public companies, Coke Femsa has at least some hedges for currency risk, but it has to book its holdings in pesos for accounting purposes.