Mexico’s antitrust body has voted not to authorize Sherwin-Williams’ $2.34bn acquisition of Mexico’s Consorcio Comex agreed last year, Sherwin says. Officials are concerned about the US paint products company’s ability to set artificially high prices in Mexico. The buyer says it plans to address the commission’s concerns with the aim of proceeding with the deal. In November Comex agreed to sell to Sherwin for $2.34bn, in cash and assumed debt, following a competitive process. The deal came at 1.7x sales and was expected to double Sherwin’s business in LatAm. HSBC and JPMorgan advised Comex and Goldman Sachs advised Sherwin, according to Dealogic data.
Category: M&A
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Chevron Enters YPF JV
Chevron has agreed to invest in a $1.5bn joint venture with Argentina’s YPF to develop shale oil and gas deposits, it says. The deal marks the first big investment in Argentina by a major international company since the government expropriated a 51% stake in YPF from Spain’s Repsol last year. In the deal, Chevron will initially invest $1.24bn in a pilot project to develop shale deposits in the Vaca Muerta formation in the Neuquen. YPF has already invested another $260m in the project. The agreement can take advantage of new incentives allowing companies investing at least $1bn in Argentina to eventually be allowed to sell 20% of their production abroad without paying export taxes.
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Glencore Peru Project up for Sale
GlencoreXstrata has formally launched the process to sell its $5bn-plus Las Bambas copper project in Peru. The miner has hired BMO and Credit Suisse to manage. A sale would satisfy a pledge made to China’s Ministry of Commerce in April, in exchange for Chinese approval of Glencore’s $30bn takeover of Xstrata. The seller has already received “expressions of interest in the Las Bambas project from a diverse group of international mining companies and potential investors,” it says. Located near the city of Cusco, Las Bambas is estimated to have more than 10.5m tons of copper resources and should begin production in 2015.
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Macquarie Fibra Grows
The Fibra Macquarie Mexico real estate fund has agreed to spend MXP2.8bn ($222m) on a portfolio of six commercial properties, it says. The deal with Inmobiliario Carr includes an additional contingent payout MXP84.4m. The Macquarie fund plans to pay about MXP1bn with the issuance of 37.6m shares, and the rest with cash, possibly using credit lines. The package includes four commercial properties, one mixed use development under construction and an office building.
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Fibra Uno Adds Commercial Portfolio
Fibra Uno has agreed to acquire a portfolio of 49 commercial properties from MRP Group for MXN23.16bn ($1.83bn), the Mexican real estate investment trust says. Fibra Uno adds that it expects MXP1.77m pesos in net operating income annually from the buy. The deal follows the acquisition announced last month of eight office properties, a Hilton Hotel in Mexico City and a shopping center under construction in Aguascalientes for MXP3.8bn. The fund is considering a domestic bond this year to get a leverage ratio around 30%, from 25%, after funding itself through equity sales. It raised $1.73bn-equivalent in a January follow-on, adding to the $1bn it raised in previous transactions.
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Oi Sheds Tower, Cable Assets
Brazil’s Oi is set to raise BRL2.43bn ($1.09bn) from agreements to sell cellular towers and its stake in an undersea internet cable, it says. A private equity fund operated by BTG Pactual has agreed to pay BRL1.75bn for the Brasil Telecom Cabos Submarinos, an operator of 22,500-km of cables connecting the US, Bermuda, Colombia, Venezuela and Brazil. Separately, it agreed to transfer the use and commercial rights of 2,113 towers to SBA Communications for BRL687m. The telecom is raising funds for infrastructure buildout this year. A BRL800m domestic bond was recently halted, though the company is expected to proceed with it later this year. An official at Oi did not respond to a request for additional comment.
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Chilean Bottler Expands in Brazil
Chile’s Embotelladora Andina has agreed to buy Brazilian Coca-Cola bottler Companhia de Bebidas Ipiranga in a deal valued at BRL1.22bn ($540m), it says. The purchase was seen 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 it will assume. It plans to use debt to finance the transaction, with a bridge loan in place before an eventual takeout in the international bond market, according to remarks made by company officials in a conference call. “The transaction is fair and in line with Coke bottler acquisitions of the last three years,” IMTrust says in an equity research note. The shop values the deal at 10.9x 2012 Ebitda and 1.75x sales. Andina’s share price reacted negatively, however, falling 2.32% Thursday to CLP2,690. Fitch has placed Andina’s A rating on negative watch as a result of the announcement, expecting an increase in net leverage to 1.9x on a pro-forma basis. Ipiranga, with operations in Brazil’s Sao Paulo and Minas Gerais states, had 2012 revenues of BRL695m, and Andina expects BRL10m per year in operating synergies. The deal is expected to close by the end of the year. JPMorgan advised Andina.
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Mills Sheds Services Business
Brazil’s Mills Estruturas e Servicos de Engenharia has agreed to sell its Servicos Industriais unit to private equity firm Leblon, it says, for BRL102m ($45m). The unit offers industrial painting and insulating services, and its sale is part of the construction specialist’s strategy to focus on core businesses. Rothschild advised Mills.
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OGX Looks for Additional Partnerships
Brazil’s OGX is in the process of selling stakes in some of its exploration block licenses, it says. “The company is in talks over the blocks it won without partners” in an auction in May, it says, to avoid running out of cash. OGX has been awarded 10 licenses to operate blocks as well as stakes in three other blocks in which it has partnerships with ExxonMobil, Total and Queiroz Galvao. It is facing a liquidity crunch and has seen credit rating downgrades follows the company’s announcement that its wells the Tubarao Azul field may cease production by 2014 and it will not develop three other fields. Analysts are also skeptical that it controller Eike Batista will be able to provide a $1bn put option to the company. OGX brought in Malaysia’s Petronas as a 40% partner in the Tubarao Martelo field in May, raising $850m.
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Energisa Wins Bid for Rede
Shareholders in Brazil’s Rede Energia have opted for a competing acquisition bid from Energisa, over a package put forward by CPFL and Equatorial last year. Under the deal, Energisa will offer creditors three options for repayment. The first is to have debt repaid in 2045, in which case secured creditors would get TR+2% interest and unsecured creditors, 1% interest. The second would offer an interest pick-up – to TR+4% on secured debt and ICPA+1% for unsecured debt, but only if holders increase their investment by 90%. Under a third option, creditors would get three-quarters of their principal back 30 days after regulatory approval comes through. Rede filed for bankruptcy protection in November. Controlling shareholder Jorge Queiroz de Moraes on Monday cancelled an agreement reached in December to sell his stake to CPFL and Equatorial for BRL1. Under that agreement the buyers would have also taken on debt and committed to making other investments.