America Movil (AMX) has made a EUR7.2bn ($9.6bn) offer for the 70.2% of Royal KPN that it doesn’t own. The move is seen by analysts as an attempt to thwart Telefonica’s ambitions for KPN’s German operation, as well as requiring higher leverage for AMX. The bid comes weeks after the Dutch telecom agreed to sell its German E-Plus business to Spain’s Telefonica for EUR 5.0bn cash and a 17.6% stake in Telefonica Deutschland post-transaction. Many see AMX attempting to make Telefonica pay a higher price for E-Plus, though the Mexican remained ambiguous when announcing Friday’s move. AMX is “carefully evaluating the merits of the proposed [E-Plus] transaction and will make a final determination in relation to the exercise of its voting rights at the upcoming extraordinary general meeting of KPN,” it says. The Telefonica offer for E-Plus has been backed by KPN’s board, which adds Friday that it will consider the new AMX bid for KPN. There are several possible outcomes, Bernstein says in a report, including Telefonica getting E-plus at its offered price, being forced to pay a higher price, or not getting it at all and leaving AMX as the consolidator in Germany. “The story is far from over,” it says. The Carlos Slim-controlled telecom is offering EUR2.40 per share, it says, for 4.26bn shares, a 35% premium to the average of the previous 30 days and a 20% premium to the previous session’s close. Shares closed at EUR2.32 Friday. The transaction implies a multiple of 5.0x-6.0x, according to analysts, in line with the estimates for last year’s purchase. However, it is seen requiring the buyer to cancel a share buyback and obtain new debt financing. “This news is negative for the company, as AMX is increasing its leverage to acquire a business with limited growth potential in the short term, although this may be corrected,” Monex says, expecting eventual net debt/Ebitda of 2.0x, up from 1.6x. Fitch says such indebtedness could lead to a “modest downgrade.” America Movil did not r
Category: M&A
NII Sells Towers
American Tower has agreed to pay LatAm-focused telecom NII Holdings $413m for up to 2,790 cellular towers in Brazil and $398m for up to 1,666 towers in Mexico, it says, as part of a sale-leaseback. Nextel Brazil and Nextel Mexico have 12-year minimum initial lease terms with American Tower and can extend as part of the leaseback plan. All payments are to be in local currency. American Tower says it plans to use cash on hand and its current credit facilities to fund the deals. Evercore advised American Tower and Kilpatrick Townsend & Stockton was its legal advisor. NII Holdings was advised by Deutsche Bank Securities and by law firms Jones Day and Lape Mansfield Nakasian & Gibson. The deals are expected to close in 4Q 2013, subject to regulatory approvals. NII Holdings plans to use proceeds to help fund further growth in Brazil and Mexico.
Chilean Mandates for M&A Bridge Takeout
Chile’s Embotelladora Andina is targeting a potential international bond sale and is heard having named Itau, JPMorgan and Santander to manage. Specifics on size and tenor remained to be determined for what would be the borrower’s first international deal since 1997. The bottler last month agreed to buy Brazilian Coca-Cola bottler Companhia de Bebidas Ipiranga in a deal valued at BRL1.22bn ($527m), with officials indicating at the time that a bridge loan would be followed by an eventual takeout in the international bond market. Embotelladora Andina declined to comment on the matter Wednesday. JPMorgan was advisor on the acquisition. The purchase was seen at the time as fair to slightly expensive, and adds to Andina’s existing assets in Brazil as it expands its footprint outside of Chile. The buyer is to pay the BRL1.22bn amount minus Ipiranga’s outstanding net debt at the time of closing, which should happen by year-end. Andina is rated A, with Fitch placing it on negative watch following acquisition and expecting an increase in net leverage to 1.9x on a pro-forma basis. A transaction would be Andina’s first international deal since a $350m sale in 1997 that included 10, 30 and 100-year maturities, according to Dealogic data. A new bond deal would be the latest in a growing trend toward using the bond market for M&A financing, following acquirers such as Cencosud.
Raizen Buys into Toll Collection Service
Raizen, the Brazilian fuel joint venture between Cosan and Shell, has agreed to pay BRL250m ($109m) for a 10% stake in a toll collection technology provider. It is buying the shares of Servicos e Tecnologia de Pagamentos, known for the Sem Parar and Via Facil services, from holders including road operators Companhia de Concessoes Rodoviarias (CCR) and EcoRodovias. CCR’s portion accounted for 4%. The transaction is subject to regulatory approval. BTG Pactual advised the target, according to Dealogic data.
SMU Adds to Sale List
Chilean retailer SMU has indicated it will look to sell home improvement store Construmart and wholesalers Distribuidora del Pacifico and Peru-based Mayorsa, it says, as part of a plan to raise $300m-$400m. The move follows SMU’s indications last month that it would look to sell its 40% stake in Supermercados Monserrat. Monserrat would likely account for $140m of the $300m-$400m target. SMU is in the process of valuing the assets and looking for possible buyers. In July, it revealed reporting errors that put it in violation of debt covenants. Shareholders will approve this week a $500m equity capital increase, in which controller Alvaro Saieh is expected to put in at least $250m. SMU also plans to reduce capex targets in addition to the asset sales. The company does not respond to a request for comment on the advisors it is working with in the sale process. The covenant issues meant a Moody’s downgrade to B3 last week. SMU’s 2020 bonds were heard trading Monday in the mid-70 range.
Televisa Bulks up Cable with Acquisition
Reaction is mostly positive to Grupo Televisa’s agreement to buy MXP9.5bn ($740m) in debt of Cablecom, including convertible instruments that would give it control of the Mexican cable operator. The Mexican broadcaster is to buy MXP7bn in convertible debt instruments that represent 95% of the equity interest in the Tenedora Ares holdco which owns 51% of Grupo Cable TV, known as Cablecom, Televisa says. Ares also comes away with an option to buy the remaining 49% of Cablecom at a value of 9.3x Ebitda during the 12 months prior to exercising the option. In addition to the preferred debt, Televisa has also agreed to buy MXP2.5bn in non-convertible debt instruments. Cablecom estimates MXP1.6bn in Ebitda on MXP3.9bn revenue in 2014, Televisa says. Moody’s estimates that exercising the option would cost $580m, it says in a report calling the deal “credit positive,” as it would allow Televisa to better compete with the main telecom service providers in Mexico. “With a higher number of customers, Televisa will be better equipped to compete with the main telecom service providers in Mexico, namely America Movil’s Telmex, the country’s dominant landline operator, which is currently seeking a license to provide pay-TV services in Mexico,” the agency says. “The impact will be positive, as Cablecom would increase Televisa’s estimated 2014 sales by 5.0%, and Ebitda by 5.2%,” brokerage Ve Por Mas says. Monex sees the gains in both at around 5%, calling the transaction “neutral” in the short term and generating value only in the medium or long-term. Shares rose 0.94% Thursday on the news to MXP69.72, versus a 2.51% rise in the Mexican index. Cablecom offers video, telephony and data services in Mexico, in addition to services for corporate customers. The transaction is subject to regulatory approval. Officials at Televisa declined to provide additional comment on the transaction.
European Swoops in for Satmex
France’s Eutelsat Communications has agreed to acquire Mexico’s Satmex, the parties say, for an enterprise value of $1.14bn. The transaction caps off a long saga involving two bankruptcies for the Mexican satellite operator, though the actual sale was quite speedy, according to people familiar with the process. The competitive process was heard beginning in May, and initially involved about 25 parties, including satellite operators and financial players with telecom experience. The deal includes $831m cash and the assumption of $311m in net debt. Eutelsat sees an EV/Ebitda multiple of 9.7x, excluding some $100m in tax losses carried forward. Satmex will add to Eutelsat’s top-line growth, and be slightly dilutive to its Ebitda margin, but expected growth should lead to higher margins in the future, Eutelsat says. The multiple would be higher without the tax losses, according to a person familiar with the sale, who notes the 9.7x multiple is in line with the median for the industry. The deal is also seen giving Eutelsat a footprint in LatAm that would be difficult to buy otherwise or to grow organically. The sellers included private investors receiving equity during the bankruptcy process, led by Centerbridge Partners and Monarch Alternative Capital. Satmex exited bankruptcy in 2011. The satellite operator repaid its bondholders in full, and raised $360m last year in 9.5% 2017 NC3 bonds, the company’s only outstanding debt heading into Wednesday’s transaction. Also key to sealing the deal was the successful launch this year of the new Satmex 8 satellite, after some delay, to replace an older satellite whose impending demise threatened the company’s recovery prospects. The deal is expected to close this year. Perella Weinberg advised Eutelsat, and Goldman Sachs and Credit Suisse advised Satmex.
Canada Pension Pays up for Brazilian Mall Stake
The Canada Pension Plan Investment Board (CPPIB) has agreed to acquire a 27.6% percent stake in Brazil’s Aliansce Shopping Centers from US-based REIT General Growth Properties for $480m, Aliansce and CPPIB say, a deal coming at well above market price. The 43.8m shares involved would have fetched BRL880m ($390m) at the previous day’s BRL20.10 closing price, suggesting CPPIB paid a 23% premium. Separately, the US fund has agreed to sell a 12.4%, or 19.7m share, stake in Aliansce to the Rique Empreendimentos e Participacoes vehicle owned by Aliansce co-founder and CEO Renato Rique. The price was not disclosed, but such a stake would fetch BRL396m at the previous closing price, and BRL488m if done at the price CPPIB paid. Rique comes away with a 23.6% share of Aliansce, and is to agree to a shareholders’ pact with CPPIB. The deal adds to CPPIB’s Brazilian real estate portfolio already worth CAD900m ($874m). Aliansce shares closed at BRL20.91 Tuesday. The CPPIB portion of the transaction is expected to close in the fall.
PE Makes Colombian Oil Investment
Private Equity firms Capital International and Acon Investments have jointly acquired control of Vetra Energia, a privately-held Colombian oil producer, they say, from Spain’s Inveravante and minority holders. The two don’t disclose the price paid for Vetra, which produced more than 6,100 barrels-per-day in 1H 2013. It has 18m barrels in proven reserves and expects to reach 25m-30m, according to a person familiar with the company. The pair takes 85% of Vetra, with a group of minority investors lowering their stake from 25% to 15%, according to a person familiar with the deal. This group includes some of the company management, which is to stay in place. The funds come from the $3bn EM-focused Capital International Private Equity Fund VI and from the $173m Acon Latin America Opportunities Fund, as well as significant equity commitments from co-investors. Vetra has operations in Colombia, Peru and Mexico. Spanish investment firm Inveravante keeps its stake in Monclova Pirineo Gas, which operates in Mexico and was spun off from Vetra. The selling shareholders were advised by Horizon Capital and Cuatrecasas Gonzalves Pereira. Officials from the buyers declined to provide additional comment or did not return requests for comment.
Colombia Aims High on Isagen Privatization
Colombia has revived plans to privatize electricity generator Isagen, hoping to draw at least COP4.479trn ($2.37bn) from the sale of its 57.66% stake by offering its shares at more than COP100 higher than market value. Finance minister Mauricio Cardenas said Monday the time was right to sell the government’s holding of 1.57bn shares, because the company was solid, efficient, and Colombia’s electricity generation industry was mature. The government will put the proceeds towards funding infrastructure projects. The minimum price is set at COP2,850 a piece, but the government will auction shares among “recognized strategic investors” in a bid to find a higher price, it said in a statement. Isagen’s shares closed at COP2,725 Monday. The deal comes at a strong point for the company, as it prepares to launch a major hydroelectric project next year, said Omar Escorcia, analyst at Asesores en Valores. But another analyst said the government would struggle to sell its stake so far above the market value. The minimum price equals 12.5 time projected 2014 Ebitda, the finance ministry said on its website. Privatization of Isagen has been on the cards for a long time. In 2009, the sovereign mandated Credit Suisse and Inverlink for the deal. Then, the government hoped to raise around COP3trn, with the company’s shares trading at COP1,820 each.