By Carolina Mandl
    SAO PAULO, Oct 7 (Reuters) - Mergers and acquisitions in
Brazil bounced back in the third quarter as companies from car
rental firm Localiza  RENT3.SA  to card processor StoneCo Ltd
 STNE.O  sought ways to ride out the coronavirus storm after a
deal slump earlier in the year.
    M&A activity grew by 46% in the third quarter from the same
period a year earlier, to $12.5 billion, according to Refinitiv
data.
    Still, overall deals are down 37% through September as
transactions dried up earlier in 2020 while companies had to
manage liquidity issues to face an unprecedented crisis.
    Those issues started to ease in the third quarter, in part
because the immediate panic about the coronavirus had eased and
in part because companies saw their shares as a tempting
currency for takeovers.    
    "In deals involving stock as a currency, companies preserve
cash and may also boost it because of all the potential
synergies stemming from the deal," said Diogo Aragao, head of
Brazil M&A at Bank of America. "It is a way to create value for
shareholders amid an economic downturn."
    The three-month period saw Localiza bid to acquire smaller
rival Unidas  LCAM3.SA , card processor StoneCo Ltd and software
provider Totvs SA  TOTS3.SA  battle to take over Linx SA
 LINX3.SA  and education companies like Ser Educacional SA
 SEER3.SA  competing for Laureate Education Inc's  LAUR.O 
assets in Brazil.
    Common themes in the deals included a quest for greater
efficiency, and gaining additional clients - both potential ways
to cushion this year's recession. In each, the buyers used both
stock and cash as currency - and bankers said more are likely to
happen by year-end.
    Long-awaited deals, such as the sale of telecom carrier Oi
SA's  OIBR4.SA  mobile assets, also boosted volumes in the
quarter. TIM Participações  TIMP3.SA , Telefônica Brasil
 VIVT4.SA  and Claro SA, owned by América Móvil  AMXL.MX , made
a joint bid of 16.5 billion reais for the unit.  urn:newsml:reuters.com:*:nL1N2G40Q1
    
    IPO BOOMLET
    Some bankers said they expected capital markets turmoil in
coming months amid increasing concern about budget-busting
government policies and a jam-packed IPO pipeline could make
some companies more amenable to takeover approaches.
 urn:newsml:reuters.com:*:nL2N2GL0WL
    "IPOs can sometimes compete with our M&A activity," said
Roderick Greenlees, head of investment banking at Itau Unibanco,
which led Brazil's M&A rankings in the third quarter.
    "Now, as market conditions deteriorate and companies face
more challenges to go public, some will potentially turn to
M&A," he added.
    Deep-pocketed private equity funds may appear as an
alternative for cash-starved companies, for instance. U.S. firm
Advent International LLC recently raised a $2 billion fund
focused on Latin America companies.  urn:newsml:reuters.com:*:nL1N2GP14L
    Still, as capital markets are not completely closed for
share offerings, companies which manage to raise money may also
be M&A protagonists.
    "Those companies which managed to raise money in share
offerings will also act as consolidators in their sectors
through M&A", said Gustavo Miranda, investment banking head at
Banco Santander Brasil SA.
    Brazilian companies have raised 11.2 billion reais ($2.02
billion) in primary share offerings this year.
    Despite the surge in third-quarter deal volumes, bankers are
still hesitant to forecast that the full-year total might exceed
that for 2019, as M&A activity was virtually frozen for nearly
six months amid the pandemic.
    But given that talks about several potential deals have just
resumed recently, the first quarter of 2021 could become quite
busy, bankers say.   
    
    Below are the table for M&A advisory in Brazil
    
    Brazil M&A League Table - Jan-Sept
 Financial       Deal value  Number of
 advisor         ($ mln)     deals
 Itau Unibanco   7,599       27
 Bank of         7,154       9
 America                     
 BR Partners     6,546       19
 Goldman Sachs   5,339       6
 BTG Pactual     5,145       18
 Rothschild      3,703       10
 JPMorgan        1,919       4
 Morgan Stanley  1,764       9
 Bradesco        1,624       17
 BNP Paribas     640.4       3
 Total           19,146      484
 

($1 = 5.5543 reais)


($1 = $1.0000)

 (Reporting by Carolina Mandl; Editing by Christian Plumb and
Andrea Ricci)
 ((carolina.mandl@thomsonreuters.com; +55 11 5644 7703; +55 11
97116-3806;))