Anew wave of multilatina firms is emerging, and it is shaking up old, complacent ideas about Latin America’s multinationals. Traditionally, multilatinas were either Mexican or Brazilian former state-owned enterprises (SOEs), which enjoyed deep relationships with governments and were concentrated in industries swaddled in protectionism after privatisation. The handsome profits made from domestic monopoly positions allowed them to go on the acquisition trail abroad, knowing that profits at home were protected. Not surprisingly, those that were well run have thrived.

Challenging times

Some of these traditional multilatinas, particularly in Mexico, are now facing new challenges. The country is belatedly waking up to just how damaging the lack of anti-trust policies has been – Telmex has more than 90% of the fixed-line market – just as foreigners become more interested in the fast-growing region again. Life may become tougher as anti-trust regulators stop barking and start biting. For firms that are still under government ownership, as is the case with Brazil’s Vale, acquisitions overseas are likely to prove sticky with other national governments: the worries over sovereign wealth funds and their motives illustrates just how uncomfortable life can become for acquisitive SOEs.


At the same time, a new breed of multilatinas is emerging, from steel company Gerdau to meat packer JBS Friboi. What they share is excellent, tight management, good cost controls and the flexibility that comes from thriving in high-risk markets. “These firms have become increasingly competent and efficient as they have been exposed to difficult market conditions over the past 20 years,” says Andrea Goldstein, senior economist at the Organisation for Economic Co-operation and Development, who has written a book on emerging-market multinationals. They have also been spending to catch up in areas such as research and development and on developing brands, he says.

Critically, what has changed for them is that they are now on a much more level playing field with developed-market companies in terms of access to funding. That said, even now, firms from small markets are still hamstrung by a lack of cheap financing. Colombian and Argentine companies are severely constrained by political instability and that makes it doubly impressive that firms such as Bancolombia and Arcor have stood their ground through their countries’ crises and emerged stronger.

It is unclear just how many firms will thrive in the new global environment and how many new ones will emerge. Mr Goldstein says: “It is difficult to analyse data because these operations are so new. You just don’t have

the time span.” What is certain is that multilatinas are going to be more diverse, more persistent competition in mergers and acquisitions, and carry off prizes that were once the exclusive preserve of blue-chip, developed-market companies.


Cemex (Mexico, building materials)

Monterrey-based Cemex made net profits of $2.4bn last year and earnings before interest, taxes, depreciation and amorisation (EBITDA) grew 11% to $4.6bn. The firm’s CEO is Lorenzo Zambrano. Cemex grew from humble beginnings in 1906, rapidly leading the consolidation of the Mexican cement industry. By 1992 it was buying abroad, starting in Spain and moving on to other Latin countries and the US. It is now the world’s largest building materials supplier and its third largest cement producer.

Cemex bought Australian building materials company Rinker for $14.2bn last year. The purchase is the biggest takeover of a company in the history of the sector and the largest foreign purchase ever by a Mexican company. The move followed on from the extremely successful $4.1bn acquisition of the UK’s RMC in 2005.

Telmex/América Móvil

(Mexico, telecommunications)

Mexico City-based Telmex reported EBITDA of $5.8bn in 2007, a drop of 4.1% since the previous year, while América Móvil reported EBITDA of $11.8bn in the same period, up 41.6%. The controlling shareholder of both firms is Carlos Slim, the world’s richest man. From roots as a privatised monopoly, Telmex and later América Móvil (which was spun off in 2001 partly to avoid anti-trust scrutiny) have built a dominant presence in their home market.

In their respective markets, Telmex has more than a 90% share and América Móvil has more than 70%. They have grown in Latin America, even penetrating the US, where América Móvil has built up a 28% share of the prepaid market. Telmex is preparing to spin off international operations through a new firm, Telmex Internacional, to be listed on the US and Mexican markets. It should include fixed-line operators, television cable companies and internet service providers in Argentina, Brazil, Chile, Colombia, Ecuador and Peru. and

Vale (Brazil, mining)

Rio de Janeiro-based Vale made pre-tax profits of $20.3bn in 2006. Valepar, which is owned by government entities and pension funds, holds 35.2%, and there is a free float of 61.2%. Its CEO is Roger Agnelli. Vale, privatised in 1997, is a world leader in iron ore and nickel and is growing fast in other non-ferrous metals.

It grew through consolidation in Brazil and, until recently, small acquisitions overseas. The $19bn takeover of Canadian mining concern Inco in 2006 put Vale at second place in the world mining league tables. It is now seeking a financing package to take over English/Swiss miner Xstrata in a deal worth $90bn.

Televisa (Mexico, media)

Mexico City-headquartered Televisa had net income of $799m in 2006 and $243.9m in the third quarter of 2007. The CEO is Emilio Azcárraga Jean. Televisa is the largest media company catering to Spanish speakers in the world. Through a raft of subsidiaries the firm is involved in areas including television production, broadcasting and distribution; cable; publishing; radio; and an internet portal.

It accounts for 60% of Mexico’s advertising market. Recently, Televisa, which had a minority stake and an established relationship with Univision, the Spanish-language broadcaster in the US, was thwarted in its bid to buy the firm.


Gerdau (Brazil, steel)

Porto Alegre-based Gerdau reported net income of R$3.5bn ($1.9bn) in 2006 and net profit reached R$3.4bn in the first nine months of 2007, a 7.6% year-on-year improvement. Its CEO is André Gerdau Johannpeter. After being formed as a nail factory, it now operates in several Latin American countries as well as Canada and the US.

Gerdau kicked off international expansion by buying a 40% stake in Spain’s Sidenor. In January, it announced a definitive agreement to buy Quanex Corporation, the second largest producer of specialty steel in the US, for $1.5bn. Last year, it bought Chaparral Steel for $4.2bn.

JBS Friboi (Brazil, meat packing)


São Paulo-headquartered JBS Friboi reported $1.8bn in 2006 revenues, which should rise to about $13bn this year with its acquisitions. Joesley Mendonça Batista is the CEO. JBS Friboi was founded in 1953 in Goiás in central Brazil. It only started making foreign acquisitions in 2001, which were initially confined to Argentina but it is now the largest meat producer and exporter in Latin America.

Friboi bought US meat packing firm Swift for $1.46bn last year, with production and distribution operations in Brazil, Argentina, the US and Australia. This followed the 2005 purchase of Argentina’s Swift Armour for $200m.

Fomento Económico Mexicano, SA (Femsa) (Mexico, brewer and soft drinks)


Headquartered in Monterrey, Femsa reported total operating income in 2006 of $1.6bn. Its CEO is Carlos Salazar. Femsa was founded in 1988 after a debt restructuring of its predecessor VISA and since that low point has become the largest beverage company in Mexico and Latin America.

It is perhaps best known as the bottler for Coca-Cola and is the second largest Coke bottler in the world, operating in nine counties. In December, Bill Gates announced that he would invest some $390m in Femsa through Cascade Investments, providing a big boost to the firm.


Bancolombia (Banking, Colombia)

Medellín-headquartered Bancolombia had a net income of $376.5m in 2006. Its CEO is Jorge Londoño Saldarriaga. As the largest Colombian retail bank and leading investment bank, it was formed through the merger of three banks and has about 700 domestic branches in the country with a client base of more than four million.

Bancolombia announced it would acquire El Salvador’s Banco Agrícola in late 2006. The $900m purchase gave it nearly one-third of El Salvador’s deposit base. Last May, Bancolombia issued the first ever international subordinated bond from a Colombian financial institution to help pay for the acquisition.

Arcor (Argentina, confectionery)


Arroyito-based Arcor remains a privately owned company and is not listed. Its annual turnover is $1.5bn and it has 41 industrial plants throughout Latin America. Arcor is the world’s largest producer of sugar confectionery and is the leading exporter in Argentina, Brazil, Chile and Peru, with exports going out to more than 120 countries.

A large investor in technology, it is one of the few large Argentine companies that did not go bankrupt or sell out to foreigners during the 2001/02 financial turmoil. Arcor set up a strategic association with the French giant Danone in 2005, which will enable it to unify its business of cookies and cereal bars in Mercosur.


GP Investimentos (Brazil, private equity)

Headquartered in São Paulo, GP Investimentos announced net income last year of $185.3m. Its CEO is Antonio Bonchristiano. GP Investimentos has emerged as a private equity giant in Brazil and is now stretching its wings. It launched its first private equity fund in 1994 with $500m. By 2007, it was on its fourth fund and was able to get first closing commitments of $1.03bn. In December, GP announced it would open a Mexican office to be headed by Marcio Trigueiro, one of it seven partners. Money will be allocated from the firm’s $1.3bn fund, which has a mandate to invest outside Brazil.


Multilatina profit ratings

  • Cemex made net profits of $2.4bn last year and earnings before interest, taxes, depreciation and amorisation grew 11% to $4.6bn.
  • Telmex reported EBITDA of $5.8bn in 2007.
  • Vale made pre-tax profits of $20.3bn in 2006.
  • Televisa had net income of $799m in 2006 and $243.9m in the third quarter of 2007.
  • Gerdau reported net income of R$3.5bn ($1.9bn) in 2006 and net profit reached R$3.4bn in the first nine months of 2007.
  • JBS Friboi reported $1.8bn in 2006 revenues, a figure that should rise to about $13bn this year with its acquisitions.
  • Femsa reported total operating income in 2006 of $1.6bn.
  • Bancolombia had a net income of $376.5m in 2006.
  • Arcor has an annual turnover of $1.5bn.
  • GP Investimentos announced net income last year of $185.3m.