The Brazilian M&A market has experienced a significant recovery over the last 12 months, although activity remains substantially below the 2021 peak. In 2025, deal volume was materially constrained by elevated interest rates, tighter credit conditions, and persistent valuation gaps between buyers and sellers. Nonetheless, the market has gradually stabilised, culminating in an increase in transaction volume compared with 2024.

Three primary factors have contributed to this improvement:

• a more stable macroeconomic backdrop and lower inflation volatility, despite still restrictive financial conditions;
• enhanced policy and macroeconomic predictability; and
• increased appetite from strategic buyers pursuing consolidation opportunities and operational synergies.

Private equity activity remains selective, with greater emphasis on bolt-on acquisitions rather than large platform deals. Cross-border transactions have also persisted, particularly inbound investments in infrastructure, energy transition, agribusiness, education and technology-enabled services.

Overall, while the market is not experiencing a boom, it has become more disciplined, structured and risk-sensitive. Financing conditions remain central to deal execution: the Selic rate (the Central Bank of Brazil’s policy rate) was held at elevated levels (15.00% p.a. from June 2025), but the Central Bank reduced this to 14.75% in March 2026.

Key trends in the Brazilian M&A market over the past 12 months include:

• Valuation discipline and structured pricing mechanisms: Persistent valuation gaps and a higher cost of capital have reinforced the use of earn-outs, deferred or staged payments, seller (vendor) financing and more detailed price adjustment mechanisms. Locked-box structures remain common in private deals, while completion accounts are still preferred in transactions characterised by higher volatility or greater working-capital sensitivity.
• Increased regulatory and compliance scrutiny: Investors have continued to place great emphasis on environmental, social and governance (ESG), data protection compliance (LGPD/GDPR), tax contingencies and labour liabilities. Due diligence has become more granular and risk-led, particularly in mid-market transactions where execution risk and succession liabilities tend to be more pronounced.
• Sector-driven consolidation: Rather than broad-based expansion, activity has remained concentrated in industries undergoing structural consolidation, including healthcare, financial services, energy/renewables and technology/digital infrastructure (with additional momentum around data-related assets).
• Distressed and special situation transactions: While large-scale distressed M&A has not dominated the market, selective opportunities have emerged, often linked to refinancing pressure and portfolio rationalisations (notably in retail, real estate development and specific technology verticals).
• Strategic foreign capital in regulated sectors: Inbound investors have continued to pursue infrastructure and digital infrastructure assets, frequently through structured partnerships, consortia or joint ventures, reflecting both regulatory sensitivities and funding or operational reasons.
• Buyer payment guarantees: Sellers are increasingly requiring buyers to provide guarantees of their payment obligations. These guarantees may include bank guarantees, escrow arrangements or other credit enhancement mechanisms, parent or sponsor guarantees, equity commitment letters or security interests, to ensure that deferred or staged payments are adequately secured, reflecting a heightened focus on counterparty and financing risk in volatile market conditions. This trend has also been reinforced by cases where certain buyers, including some large or well-known market participants, experienced financial constraints and did not proceed with previously agreed transactions, even for relatively smaller deals. This has increased seller sensitivity to completion and credit risk.
• Insurance-backed risk allocation in M&A: A parallel trend is that buyers are more frequently opting to secure sellers’ representations and warranties and other indemnification obligations through insurance (such as W&I insurance), rather than through traditional escrows or other forms of guarantees. This shift can streamline negotiations over indemnity caps, survival periods and escrow amounts, and reduce the need for extensive post-closing recourse against sellers.

The most active sectors in Brazil over the past 12 months have been the following:

• Energy and renewables: There has been sustained activity across solar, wind and distributed generation assets, supported by energy-transition policies and long-term demand visibility. Non-renewable projects also deserve highlighting, such as transactions involving thermoelectric and nuclear power.
• Infrastructure and logistics: Concessions, sanitation projects and logistics platforms have continued to attract domestic and foreign investors, in line with Brazil’s infrastructure modernisation agenda.
• Technology and digital infrastructure: Data centres, SaaS providers, fintechs and cybersecurity companies have remained attractive targets. While venture capital funding has slowed relative to prior years, strategic acquisitions have continued.
• Healthcare: Consolidation among hospital groups, diagnostic laboratories and specialised clinics has progressed through buy-and-build strategies.
• Financial services and credit platforms: Selective acquisitions involving fintechs, securitisation platforms and alternative credit vehicles have taken place, reflecting the continued development of Brazil’s capital markets.
• Agribusiness: Brazil’s position as a leading agricultural exporter continues to support investments in the whole country, including in inputs (including seeds and fertilisers), logistics and agtech solutions.

The primary acquisition structures in Brazil include:

• share deals (quota or share purchase agreements);
• asset deals;
• convertible loans/notes, through which investors start their relationships with targets as creditors and, once the targets fulfil some goals, such credits are converted into shares or quotas;
• corporate reorganisations, such as mergers, incorporations (including incorporation of shares) and spin-offs; and
• joint ventures and capital increases (including primary investments and follow-on rounds).

The choice of structure is typically driven by tax considerations, regulatory approvals, liability allocation and the financing strategy.

The principal authorities involved in M&A transactions in Brazil include:

• CADE (Brazil’s antitrust authority), which is responsible for merger control;
• CVM (the securities exchange regulator – equivalent to the SEC in the USA), which regulates public companies, disclosure obligations and tender offers;
• the Central Bank, particularly in financial services transactions and foreign exchange/foreign capital registrations; and
• sector-specific agencies, depending on the industry concerned (eg, ANEEL, ANATEL, ANS, ANP, among others).

Regulatory involvement in a given transaction will depend on factors such as the size of the deal, the industry and whether the target is a public company.

Brazil is generally open to foreign investment and does not impose broad-based restrictions on foreign ownership.

However, certain sectors are subject to restrictions and/or require prior approval, including:

• rural land ownership/lease (including additional limitations for real properties in border areas);
• nuclear energy and certain defence-related activities, which are subject to constitutional and statutory limitations; and
• media and broadcasting, where foreign participation is capped at 30% of voting capital under the constitutional framework and related rules.

Foreign investments must be registered with the Central Bank for FX/foreign capital reporting purposes, and transactions in regulated industries may require sector-specific clearances and/or prior governmental authorisation depending on the activity and structure.

Brazil operates a mandatory, suspensory pre-merger notification regime under Law No. 12,529/2011.

Transactions must be notified to CADE if the applicable turnover thresholds are met (ie, one economic group with Brazilian gross revenue exceeding BRL750 million and another exceeding BRL75 million, in the fiscal year preceding the transaction).

In these cases, closing prior to CADE clearance is prohibited and considered gun jumping. Violations may result in penalties, including fines and, in severe cases, nullification of the transaction.

The review may follow a fast-track (summary) procedure or, in more complex cases, a more in-depth (ordinary) investigation.

Brazilian labour law is generally protective of employees and, in the context of business transfers, provides for automatic succession of labour liabilities.

In share deals, the employing entity typically remains the same and employment relationships generally continue uninterrupted. In asset deals or business transfers, the acquiring entity may assume labour liabilities under the principle of employer succession.

Key areas of concern include:

• contingent labour claims and ongoing litigation;
• compliance with collective bargaining agreements and related benefits;
• misclassification of independent contractors and other atypical workforce arrangements; and
• historical social security (INSS) and social insurance (FGTS) liabilities, including ancillary penalties and interest.

As a result, labour due diligence is a critical component of risk assessment and deal structuring.

Brazil does not have a formal, centralised national security review regime comparable to those adopted in certain other jurisdictions.

With that said, sector-specific rules may impose prior-approval requirements and/or ownership or operational restrictions where strategic assets are involved – most commonly in areas such as defence, energy and telecommunications (depending on the asset, licence or concession framework).

In addition, the acquisition or lease of rural land by foreign individuals or entities is subject to statutory limitations and, in certain cases, may require governmental review/authorisations.

While there has not been a single landmark court decision that has fundamentally reshaped M&A practice in Brazil, a few developments have been particularly relevant:

• Continued refinement of CADE’s gun-jumping enforcement, reinforcing the importance of strict pre-closing conduct and compliance with the suspensory merger control regime.
• Greater scrutiny by the CVM in public-company contexts, particularly in regard to disclosure standards, process integrity and potential conflicts of interest in transactions involving listed companies and tender offers.
• Brazilian case law developments in contractual risk allocation, including clearer judicial support for negotiated limitations of liability and indemnity arrangements (which tends to reinforce the enforceability of sophisticated SPA risk allocation).

In addition, broader regulatory developments – such as CVM Resolution 175, which overhauled Brazil’s investment fund regulatory framework through a phased implementation – have affected structuring and execution in fund-related acquisitions and sponsor-driven transactions.

There have been no material legislative changes to Brazil’s takeover regime in the past 12 months. However, there has been a relevant regulatory update: CVM Resolution 215 (together with ancillary adjustments) introduced a revised framework for public tender offers (OPAs) and became effective on 1 October 2025 (after the CVM postponed its original effective date).

Looking ahead, while the framework may continue to evolve through CVM guidance and enforcement practice, there is no broad structural overhaul currently under active legislative review that is expected to materially reshape takeover rules in the next 12 months.

Stakebuilding prior to a formal offer is permitted in Brazil, but it is more common in public-company scenarios and less frequent in transactions involving privately held targets.

Typical strategies include:

• open-market purchases ahead of a tender offer (where permitted and subject to applicable restrictions);
• negotiated block trades with significant shareholders;
• entry through primary issuances, such as capital increases or subscription agreements; and
• shareholders’ agreements granting governance rights and/or featuring call/put options and other preagreed exit mechanics.

Any stakebuilding strategy must comply with applicable disclosure obligations, market abuse and insider trading restrictions, and (as relevant) rules governing tender offers and trading during sensitive periods.

For publicly held companies, an investor (or group acting together) that reaches or crosses, upward or downward, the thresholds of 5%, 10%, 15% (and so on, in 5% increments) of a type or class of shares must promptly notify the company, and the company must transmit the information to the CVM (and, as applicable, to the relevant trading venues).

In addition, the filing must generally disclose the purpose of the stake, the number and type or class of shares, and any agreements affecting voting or the purchase or sale of the issuer’s securities. The rules also apply to certain rights over shares and equity derivatives, with specific aggregation mechanisms depending on whether the derivative is physically or cash settled.

Listed companies may adopt additional governance mechanisms in their bylaws, including:

• “poison pill” provisions (bylaw-based mandatory tender offers triggered upon reaching specified ownership thresholds);
• enhanced disclosure and transparency requirements (eg, additional reporting to the issuer and market, to the extent consistent with applicable rules); and
• governance arrangements in shareholders’ agreements (eg, voting arrangements and call/put options), noting that enforceability may be subject to statutory limits and disclosure requirements.

However, companies cannot waive or replace the statutory and CVM-mandated disclosure regime applicable to publicly held companies; bylaw provisions may supplement, but not override, mandatory reporting obligations.

Other practical hurdles to stakebuilding commonly include insider trading and market abuse restrictions, trading limitations during sensitive periods, and – where there is co-ordination between parties in a notifiable transaction – the need to avoid pre-closing conduct that could be viewed as gun jumping (including premature integration or undue influence prior to CADE clearance).

Derivatives linked to shares of publicly traded companies are permitted, provided that they comply with securities regulations and market rules.

However, derivatives may trigger disclosure obligations if they provide economic exposure equivalent to share ownership.

Securities Disclosure (CVM)

Derivatives are generally permitted, but they may trigger (or become relevant to) mandatory disclosure in at least three common situations:

• Relevant shareholding disclosures (public companies): Where equity derivatives give an investor economic exposure and/or rights that are treated as equivalent to holding (or being able to acquire) shares, they may need to be aggregated with direct holdings for purposes of the applicable disclosure thresholds and content requirements.
• Trading disclosures by controllers/insiders and related persons: CVM rules governing trading while in possession of non-public information and related disclosure obligations can capture derivative transactions referenced to the issuer’s securities, depending on the facts and the person involved.
• Material fact (relevant act/fact) disclosure: If the derivative strategy is part of a broader transaction (eg, change of control, takeover steps or other market-sensitive events), it may also need to be assessed under the material fact disclosure framework.

Competition/Merger Control (CADE)

From an antitrust perspective, derivatives can matter in two main ways:

• Merger filing risk (substance over form): CADE’s definition of a reportable transaction is broad and includes acquisitions “directly or indirectly” via shares, via securities convertible into shares, or by contract or other means – so derivative-like instruments that effectively confer control or significant influence can raise notification questions depending on structure and thresholds.
• Gun-jumping/pre-closing conduct: Even if a derivative does not amount to a notifiable acquisition by itself, CADE may scrutinise arrangements that create de facto influence, facilitate co-ordination, or involve sensitive information exchange before clearance – especially where parties are competitors or vertically related.

Upon reaching the applicable shareholding disclosure thresholds in a publicly held company, investors must disclose the purpose of the acquisition and their intentions regarding the issuer, including whether they intend to:

• change control or influence management;
• modify the capital structure;
• pursue a delisting (where applicable); or
• promote operational or corporate restructuring.

This transparency is particularly important in the context of tender offers and situations that may lead to a change of control.

For public companies, disclosure is required when the transaction involves a material fact and either (i) a binding agreement is executed or (ii) negotiations reach a stage where the information becomes material to investors and confidentiality can no longer be reliably maintained.

There is generally no obligation to disclose initial approaches or early-stage discussions, provided that the matter remains confidential and the information has not become material in the circumstances.

Privately held companies are not subject to an equivalent public disclosure regime.

Market practice generally tracks the applicable legal requirements. In practice, however, listed companies often take a more cautious approach and may disclose developments earlier if there are market rumours, information leaks, or unusual trading activity or price movements that suggest confidentiality can no longer be preserved.

The legal due diligence typically covers:

• corporate and governance matters;
• tax compliance and contingencies;
• labour liabilities;
• litigation;
• regulatory compliance;
• commercial contracts;
• financial agreements;
• real estate and environmental matters;
• data protection (LGPD/GDPR compliance);
• ESG-related exposures;
• compliance; and
• antitrust.

The scope varies depending on deal size, sector and risk profile.

Exclusivity provisions are common in private transactions, particularly once a non-binding offer (NBO), term sheet or memorandum of understanding (MOU) is executed and the buyer is incurring meaningful diligence and structuring costs. This kind of provision is important to ensure that purchasers do not take part in a competitive bidding process.

Standstill provisions are more typical in public-company contexts, especially where a potential bidder is granted access to sensitive information and the parties seek to manage stakebuilding risk and market disruption during negotiations.

In negotiated public transactions, tender offer terms and conditions are often documented in a definitive transaction agreement between the bidder and the target (and/or, where applicable, the controlling shareholder), and then implemented through the tender offer documentation, in compliance with applicable CVM rules.

Regarding private deals, tender offer terms and conditions are normally set forth in NBOs, term sheets and/or MOUs. The definitive agreement may or may not follow these terms, depending on the results of the due diligence.

For private M&A transactions, the timeline typically ranges from three to six months, depending on complexity, diligence scope, regulatory approvals and financing. More complex deals – particularly those involving multiple jurisdictions, carve-outs or heavy regulatory overlays – may take longer.

Public-company transactions often require additional time, especially where CADE review and/or tender offer procedures apply, and where disclosure, governance and process requirements increase the length of the interim period.

The acquisition of control of a publicly held company triggers a mandatory tender offer to acquire the remaining voting shares, under the Brazilian Corporations Law and applicable CVM regulations.

In addition, bylaws may include poison pill provisions that create further tender-offer triggers at specified ownership thresholds, subject to market practice and enforceability considerations.

On the one hand, cash consideration remains more common in Brazil, particularly in private transactions. To bridge valuation gaps – especially in sectors with higher volatility – parties frequently use:

• earn-outs;
• seller (vendor) financing/vendor loans;
• deferred or staged payments;
• escrow arrangements;
• locked-box pricing mechanisms (and, where appropriate, completion accounts); and
• equity rollovers (including partial reinvestments by founders/management).

On the other hand, transactions involving shares as the sole form of consideration are becoming increasingly common. Private equity deals often employ this type of structure.

Common conditions include:

• CADE clearance, where applicable;
• sector-specific regulatory approvals, as applicable;
• minimum acceptance thresholds consistent with the transaction objective;
• no material adverse change (within market-standard parameters); and
• no material breach of representations and covenants, where relevant.

CVM rules and practice generally limit conditions that would render the offer unduly discretionary, uncertain, or inconsistent with investor protection and orderly market principles.

Minimum acceptance conditions vary depending on the intended outcome. For a change of control, a bidder will typically target a threshold sufficient to secure control of voting rights, which in practice generally means a majority of voting shares, depending on the issuer’s ownership structure and governance.

For delisting or other transactions affecting listing status and liquidity, higher acceptance thresholds may apply under CVM rules and related market standards, reflecting enhanced minority protections.

In private transactions, financing conditions are legally possible, but they are often resisted by sellers and may be accepted only in limited circumstances (or mitigated through reverse break fees, stronger covenants or evidence of committed funding).

In public tender offers, bidders are generally expected to demonstrate committed financing (or otherwise evidence the capacity to fund the offer) before launching the transaction, consistent with CVM requirements and market expectations.

Common deal protection measures include:

• break-up fees (typically subject to reasonableness and proportionality);
• non-solicitation and no-shop provisions (often with customary carve-outs);
• matching rights; and
• exclusivity arrangements during diligence and negotiation.

Brazilian law does not provide a detailed, transaction-specific statutory regime for deal protections; enforceability is assessed primarily under general contract principles, corporate governance standards, and (where applicable) fiduciary duties and disclosure requirements in public-company contexts. Interim periods are most commonly impacted by regulatory timing (CADE/sector approvals) and public-market process requirements, rather than by recent statutory changes to deal protection rules.

Where a bidder acquires a non-100% stake, additional governance rights are commonly structured through shareholders’ agreements and may include:

• board representation (and committee participation, where relevant);
• reserved matters/veto rights over key decisions;
• information and inspection rights;
• pre-emptive rights and anti-dilution protections (as applicable);
• right of first refusal or right of first offer;
• lock-up period;
• tag-along and drag-along rights;
• exit mechanisms, including put/call options and liquidity pathways.

The scope of such rights will vary based on bargaining power, regulatory constraints (if any) and the company’s governance structure.

Brazilian law permits shareholders to vote by proxy, subject to formal requirements. In public companies, proxy voting and proxy solicitation practices are also subject to applicable CVM regulation and market rules.

Brazil does not have a universal “short-form merger” squeeze-out mechanism equivalent to certain other jurisdictions. In practice, transactions seeking to reach full ownership commonly use a combination of:

• delisting tender offers, subject to CVM rules and minority protection requirements;
• corporate reorganisations, such as mergers or related restructuring steps, where permitted and properly approved;
• merger of shares (incorporação de ações), through which dissenting shareholders receive cash consideration under statutory procedures and approvals; and
• in private M&A transactions, the controlling shareholder’s drag-along rights.

Delisting transactions typically require compliance with CVM procedures and enhanced protections for minority shareholders, including process and pricing-related safeguards.

Particularly in negotiated transactions involving a controlling shareholder, it is common to seek commitments to tender and/or vote in favour of the transaction. These undertakings are typically negotiated and documented before public announcement, as part of the deal execution and certainty package.

The nature of these commitments varies. Commitments from controlling shareholders are often structured to be binding, subject to customary conditions (eg, regulatory clearance). Where commitments involve directors or governance bodies, structures may include “fiduciary out” concepts in line with governance standards, although their scope depends on the specific facts, the company’s ownership profile and the applicable process requirements.

When it comes to private M&A transactions, there are no requirements in relation to making any bid public. In the case of publicly held companies, a bid becomes public through the disclosure of a material fact to the market, in accordance with CVM regulatory standards, which are designed to promote transparency, ensure adequate information is provided to the market and safeguard equal treatment among investors.

The public nature of the bid is established through a structured regulatory process under the CVM’s supervision. As an initial step, the offeror is required to submit to the CVM a complete set of documents and supporting information concerning the contemplated transaction. Such materials generally address the structure of the offer, the proposed consideration, principal terms and conditions, funding arrangements and any other information deemed material to an informed investment decision.

Following the CVM’s review and clearance of the relevant documentation, the offeror must proceed with the formal disclosure of the transaction to the company’s shareholders and to the market at large.

The disclosure and filing requirements applicable to a transaction in Brazil are primarily determined by its structure and by the regulatory status of the parties involved. In the case of a public tender offer, the offeror must comply with the full set of disclosure obligations imposed by the CVM, including the submission of detailed documentation on the terms of the offer, consideration, funding arrangements and other material aspects of the transaction. Similarly, where a publicly held company issues shares as consideration in a business combination, the transaction may trigger additional requirements, such as the release of a formal market announcement, approval at a shareholders’ meeting, the filing of corporate acts with the CVM and, where the issuance qualifies as a public offering, the preparation of a prospectus or equivalent disclosure document. In all cases involving public companies, the information disclosed must be sufficiently comprehensive to allow investors to evaluate the economic rationale, risks and potential dilution arising from the transaction.

In public transactions, financial information is typically required as part of the tender offer documentation or other offering materials made available to the market. Publicly held companies must prepare and present their financial statements in accordance with Brazilian GAAP, which is substantially converged with IFRS standards.

Depending on the nature and magnitude of the transaction, pro forma financial information may also be required, particularly where the deal materially affects the bidder’s financial position, results of operations or capital structure. By contrast, in private transactions, there is generally no obligation to publicly disclose financial statements, in the absence of specific contractual arrangements or sector-specific regulatory requirements.

In public-company transactions, material agreements may need to be summarised or disclosed if they contain information relevant to investors.

Full disclosure of transaction documents is not always mandatory; however, the CVM may require disclosure of key provisions, particularly in tender offers or delisting procedures.

Private transactions are generally confidential.

Directors are subject to fiduciary duties owed to the company, notably the duties of care and loyalty, and must act in the best interests of the corporate entity. These obligations require directors to perform their functions with diligence, informed judgement and independence, always prioritising the company’s interests over personal or third-party considerations.

Under Brazilian law, such duties are owed primarily to the company as a distinct legal person, even though board decisions may have direct or indirect effects on shareholders and other stakeholders. Brazilian courts and regulators generally afford deference to board determinations under a business judgement rationale, particularly where directors have acted in good faith and diligently, on an informed basis and without conflicts of interest.

In transactions where conflicts of interest may arise, including related-party transactions or acquisitions led by a controlling shareholder, it is customary for the board to establish an independent or special committee composed of disinterested members.

The establishment of such committees is intended to strengthen the integrity of the decision-making process, safeguard procedural fairness and mitigate potential liability exposure, particularly in circumstances where the transaction may be subject to enhanced scrutiny by shareholders or regulatory authorities.

Brazilian courts generally recognise a standard of deference comparable to the business judgement rule, provided that directors act in good faith and diligently, on an informed basis and free from conflicts of interest.

In this context, judicial scrutiny is typically directed at the integrity of the decision-making process, with emphasis on procedural propriety rather than on reassessing the substantive merits of the underlying business decision.

In the context of significant transactions, boards customarily seek external advice in order to support their deliberations and discharge their fiduciary duties.

This typically includes:

• legal opinions;
• fairness opinions issued by financial advisers;
• independent valuation reports; and
• accounting and tax advice, depending on the structure and complexity of the transaction.

In delisting transactions, the preparation of an independent appraisal report is generally required, serving as a reference for determination of the offer price and as an additional safeguard for minority shareholders.

Conflicts of interest, particularly in the context of related-party transactions and squeeze-out procedures, have been subject to scrutiny by the CVM and to judicial review.

Regulatory practice has increasingly placed emphasis on enhanced transparency, robust procedural safeguards and the adoption of independent review mechanisms designed to preserve the integrity of the decision-making process and protect minority shareholders.

Hostile tender offers are legally permissible in Brazil but remain relatively uncommon in practice.

The structure of the Brazilian market, which is predominantly characterised by concentrated ownership and the presence of defined controlling shareholders, significantly limits the feasibility and frequency of unsolicited or hostile bids.

Defensive measures are permissible under Brazilian law; however, directors must at all times observe their fiduciary duties and may not implement such measures solely for the purpose of entrenching management or preserving the position of controlling shareholders.

Any defensive strategy must be demonstrably aligned with the company’s best interests and supported by a proper corporate rationale, consistent with the directors’ duties of care and loyalty.

Common defensive measures include the adoption of poison pill provisions in the company’s bylaws, the pursuit of white knight alternatives, the implementation of share buyback programmes and, where appropriate, the initiation of litigation to challenge alleged procedural irregularities.

In the Brazilian context, poison pill clauses frequently establish a mandatory tender offer obligation if a shareholder’s participation exceeds a specified ownership threshold, thereby operating as a deterrent against unsolicited accumulations of control.

Directors are required to act with due care and loyalty, ensuring that any defensive measures adopted are proportionate, reasonable and demonstrably directed towards the protection of the company’s legitimate interests, rather than the preservation of management positions or control structures.

Directors may not arbitrarily obstruct a transaction that is demonstrably aligned with the company’s best interests and supported by an appropriate corporate rationale.

In practice, however, the outcome of takeover attempts in Brazil is frequently influenced by the presence of a controlling shareholder, whose position may ultimately be determinative in approving or resisting a proposed transaction.

Litigation arising out of M&A transactions is less prevalent in Brazil than in jurisdictions such as the United States, but disputes do occur, particularly in connection with post-closing indemnification claims, earn-out mechanisms and delisting processes.

Brazilian courts have generally adopted a restrictive approach to the interpretation of material adverse change clauses, placing primary emphasis on the contractual language agreed by the parties and on the allocation of risks as reflected in the transaction documentation.

The majority of disputes in M&A transactions arise after closing, most commonly in relation to purchase price adjustments, indemnification claims and contingent consideration arrangements.

Pre-closing injunctions are comparatively less frequent, but may be sought in the context of contested public transactions, particularly where there are allegations of procedural irregularities or breaches of disclosure obligations.

The COVID-19 pandemic gave rise to disputes concerning the invocation of material adverse change (MAC) clauses and force majeure arguments in the context of pending transactions.

Brazilian courts have generally adopted a restrictive approach to the interpretation of MAC provisions, placing decisive weight on the specific contractual language and the allocation of risk negotiated by the parties. In response, transaction documents have increasingly incorporated more detailed and precise MAC formulations, including express carve-outs and objective financial thresholds designed to reduce interpretative uncertainty.

Shareholder activism exists in Brazil, but it remains relatively limited, largely due to concentrated ownership structures and the prevalence of controlling shareholders.

Where it arises, activism typically focuses on governance reforms, capital allocation, board composition/representation and corporate restructuring (including balance sheet and portfolio rationalisation measures).

Activists may challenge announced transactions – often by advocating for improved process, pricing or minority protections – but they generally have limited ability to block deals that are supported by controlling shareholders and conducted in compliance with applicable corporate and securities rules.

Activists typically focus on:

• governance improvements;
• board composition/representation;
• capital allocation discipline;
• dividend policy and return-of-capital initiatives; and
• corporate restructuring and portfolio optimisation.

Encouraging M&A, spin-offs or major divestitures may form part of broader strategic campaigns, particularly where activists view asset sales, carve-outs or combinations as catalysts to unlock value or address underperformance.

Activists may challenge announced transactions, particularly where they believe the consideration is inadequate, the decision-making process is deficient, or conflicts of interest may be present.

However, given Brazil’s concentrated ownership structure and the influence typically exercised by controlling shareholders, activists rarely succeed in preventing transactions that have controller support and are carried out in compliance with applicable corporate and securities rules.