Category: M&A

M&A: Investment bank Advanced Capital makes US acquisition, plans Chilean, Colombian expansion

M&A: Chile’s CFR Pharmaceuticals abandons acquisition of South African firm Adcock Ingram

M&A: Brazilian firm Gafisa plans to split from Tenda

Empresa de Energia de Bogota confirmed late Wednesday that it was looking at possible alliances to bid for Colombian power generator Isagen, which is being privatized. Consortium agreements, shared risk, or, generally, other types of agreements were on the table, the firm said in a regulatory filing. Colombia’s finance ministry said last year it would sell its 57.7% stake in the firm. Grupo Argos last week pulled out of bidding, saying the returns offered were not high enough at the COP3,178 ($1.55) per share price the finance ministry is selling at. Cemig, Duke Energy and GDF Suez have been reported to be bidding also.

Telecom Italia’s board advanced scrutiny of its 67% holding in Tim Brasil on Thursday, adopting a framework that could potentially lead to the sale of the Brazilian business. The procedural document was approved by the board on Thursday, and could also apply to asset sales of more than €2bn. Telecom Italia has not unveiled plans to divest its Brazilian unit and last month said that there were no “projects, negotiations or offers on the matter”. However, after its January meeting, the board said that it had advanced with an “in-depth analysis of the Brazilian business”, which led to media reports about a possible sale.

Brazilian highway concessionaire EcoRodovias has sold an 11.4% stake in a toll collection service, Serviços e Tecnologia de Pagamentos, to a private equity firm, it said on Tuesday. Freelane I and II, controlled by Capital International Private Equity Fund, have agreed to pay BRL292m ($121m) for the asset. EcoRodovias says the sale strengthens its capital structure and allows it to focus on new logistics projects in Brazil. EcoRodovias agreed to sell a 1.3% stake in STP in July to Raizen for BRL33m.

CCX has agreed to sell three mines to Yildirim Holdings for $125m. The price is sharply lower than the $450m which CCX indicated it might get for the assets in October, when it announced it was discussing a deal with Yildirim. CCX, part of Eike Batista’s EBX Group, on Monday highlighted that the deal was still subject to due diligence in October, and that the revised price took into account getting environmental licenses. Morgan Stanley advised CCX.

Brazil’s Cemig is reported to have joined bidding for Colombian power generator Isagen, in a government sale of 57.7% of the asset, after Grupo Argos pulled out last week. A spokesperson at the Colombian finance ministry declined to comment on the potential purchasers, saying that the authority was reviewing the information that had been submitted and would likely have further updates at the end of the month. The finance ministry last year put its stake in the firm up for sale, targeting COP3,178 ($1.55) per share. Grupo Argos said last week it had decided not to bid for the asset. The Colombian firm said that after analyzing the potential investment closely, the potential returns wouldn’t create value for Argos shareholders at the offering price. Market volatility also made it an unappetizing time to participate, Argos said. EEB said last year it was also bidding for the asset. Duke Energy and GDF Suez have also been reported to be involved. Isagen workers, unions, union federations, pension funds, unemployment funds and family compensation funds have already been offered shares.

Itau Unibanco’s agreement to take a 33.58% stake in Chilean lender CorpBanca gives the Brazilian bank a strong hold in Andean markets, making it positive for the bank, Fitch Ratings analyst Franklin Santarelli said. “[Itau Unibanco] has longstanding operations in Chile, but it was difficult to grow that organically because the competition is fierce,” he told LatinFinance. In a deal announced late on Tuesday, Itau is poised to become the fourth largest Chilean retail bank — until now it ranked seventh — growing its market share there from 4% to 12%. It will also gain a foothold in the fast-growing Colombian market, through CorpBanca’s operations. The Brazilian lender will become controlling shareholder in the new Chilean bank, to be branded Itaú. CorpBanca’s existing shareholders will hold the remainder of the institution. Itau will inject $652m of equity into its Chilean subsidiary ahead of the merger to capitalize the new institution and prepare it for future growth. Its investment banking arm, Itau BBA, will also extend a $950m 7-year credit line to CorpGroup, which holds 45.26% of CorpBanca. “The structure is positive for Itau,” Santarelli said. “They’re not deploying capital, they’re only injecting $652m into the Chilean bank, to help the balance of ownership. It’s not a large amount for Itau to spend.” The deal is thought to address a desire at CorpBanca expand in Chile through acquisition. As well as giving Itau a more solid position in Chile and an entry into Colombia, it offers a platform to move into other markets like Peru and Central America, said Mark Rosen, head of investment banking for Latin America at Bank of America Merrill Lynch, which with Goldman Sachs was advisor to CorpBanca. Itau BBA advised Itau. “This is the most significant strategic alliance for Itau that they’ve made outside Brazil so far,” he said. “Nothing they’ve done in the past is of the scale of this transaction. It’s a transformational deal for the international business of Itau.”