Walmart de Mexico is exploring the sale of its Vips restaurant division, it says. It notes that the early-stage process will not necessarily result in a sale. People familiar with the process say it has been approached by interested parties and retained Morgan Stanley this year to advise it as it considers its options. So far, interest is heard to have been from strategic players, but the retailer’s restaurant operations could also see private equity interest following the announcement. The first Vips was created in 1964 to serve visitors to the retail chain’s stores.
Category: M&A
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Italians Pull out of Banorte
Assicurazioni Generali has agreed to sell minority stakes in Seguros Banorte Generali and Pensiones Banorte Generali to Grupo Financiero Banorte for $857.5m, it says. Banorte takes full control of the subsidiaries. Looking to boost its solvency ratio back home, the Italian exits its 49% positions in the pension and insurance businesses, booking a EUR500m ($664m) gain. The disposal of the stake in Seguros Banorte Generali accounted for the bulk of the deal, at $637m, a value that implies a multiple of 18x 2012 earnings, Generali says. The deal follows an offer from Banorte. The move takes Generali past 50% of a EUR4.0bn asset disposal plan by 2015. The company notes it still considers Latin America as an “attractive market,” and would like to continue developing business there, particularly in Brazil. In November of last year, Banorte agreed to acquire BBVA’s Mexican pension operations for $1.6bn, becoming Mexico’s largest pension manager.
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French Utility Takes Over LatAm JV
French waste and water utility Veolia Environnement has agreed to buy the remainder of its Proactiva Latin American joint venture from partner Fomento de Construcciones y Contratas, it says. It will pay the Spanish construction firm EUR150m ($197m) for the 50% stake. The move is the Veolia’s first buy since it embarked on a debt reduction program three years ago that has seen it sell positions abroad. Founded in 1999, Proactiva operates in Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Venezuela, servicing 42m customers and generating EUR541m annual revenue. Veolia claims the acquisition won’t have any impact on its leverage ratio objective and will be accretive to net income starting in 2014. The acquisition is expected to be finalized by the end of this year, subject to approval from regulators. It operates in water and wastewater treatment, hazardous waste management and biomass-fired cogeneration. Societe Generale advised Veolia, according to a spokeswoman.
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JBS Delays Debt Reduction to Snag Marfrig Assets
JBS has agreed to acquire the Seara poultry and pork unit in Brazil from Marfrig Alimentos for BRL5.85bn ($2.73bn) in assumed debt, the two say. The move further extends JBS’ operations beyond beef and also includes the Zenda leather operation in Uruguay. The deal allows Marfrig to focus on its beef operations in Brazil and reduce a challenging debt burden. The debt assumed in the transaction includes maturities from 2013-2017, and about half is in USD and half in BRL, JBS CEO Wesley Batista says in a conference call. Worryingly for the markets, the additional debt comes as JBS was itself looking to de-lever. Moody’s – which in March upgraded JBS to Ba3 on improving credit metrics – put the mark on review for downgrade Monday, fretting about the impact on JBS’s short-term leverage and cash flow generation. “We are still committed to deleveraging. We are in a position to make this acquisition and continue deleveraging,” Batista says, admitting that JBS will have to “delay” its debt reduction targets, declining to specify what the new target or timing might be. “JBS has done a pretty good job historically with US buys in those sectors that were not doing well, and did a decent job of taking over and cleaning up those buys,” says a DCM banker who has worked with JBS. JBS does not plan to sell any assets to help reduce debt, Batista adds. Marfrig, for its part, is not at present in discussion for additional sales, Seara CEO Sergio Rial says in the same conference call, declining to discuss future plans. The sale means Marfig’s leverage drops net debt to under BRL4bn, Rial says, and it allows Marfrig to seek a lot more growth in its core beef area in the future. Marfrig has seen multiple negative ratings actions this year and is in the process of renegotiating covenants on its domestic bonds. JBS, already the world’s largest meatpacker, becomes the second-largest processed meat producer in Brazil, it says. JBS reopened its 2023 bonds to raise $275m in April, and is in th
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Caixa Kicks off Inbursa Selloff
Spain’s CaixaBank has agreed to sell 3.7% of Grupo Financiero Inbursa to Inmobiliaria Carso for EUR387m ($512m), it says, leaving another 6.4% to be sold through the public follow-on it is preparing. The Spanish bank books a capital gain of EUR33m from the sale back to Carso, which, like Inbursa, is controlled by Carlos Slim. Up next is the all-secondary share follow-on, where Caixa expects to sell 423m shares, with a price to be set through a bookbuild. It would raise MXP12.65bn ($989m) if done at the MXP26.00 per share price used in Friday’s transaction, assuming a 15% greenshoe, or MXP13.82bn if done at Friday’s MXP28.41 closing price. Pricing is expected this month, according to people following the sale. After the follow-on, Caixa expects to hold 9%-10% in the Mexican bank. Credit Suisse, Inbursa and UBS have been hired as global coordinators, with BTG Pactual as bookrunner on the international portion of the sale and Citi and BBVA joining on the Mexican portion. Caixa is raising funds to boost its Tier 1 capital.
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Gafisa Sells Control of Alphaville
Brazilian homebuilder Gafisa has agreed to sell a 70% stake of its Alphaville unit to private equity firms Blackstone Real Estate Advisors and Patria Investimentos for BRL1.41bn ($660m), it says, opting for a sale instead of an IPO. The amount is based on a total valuation for the high-end residential developer of BRL2.01bn. Blackstone and Patria will maintain the existing Alphaville management team, led by Marcelo Willer, and Gafisa will have two out of six seats on the board. To complete the sale to the pair of private equity buyers, Gafisa entered into an agreement with Alphaville’s founding partners to complete the purchase of the 20% stake in Alphaville it didn’t own, for BRL367m. The moves come after a strategic analysis for the Alphaville business, initiated in September 2012, in which an IPO was considered. Closing is expected in the second half of the year. Rothschild advised Gafisa on the deal.
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Cemig Looking at Petrobras Hydro
Brazil’s Cemig has expressed interest in buying a controlling stake in the Brasil PCH hydroelectric generation company from Petrobras, Cemig says. The deal is expected to be worth more than $500m. Petrobras holds a controlling 49% stake in Brasil PCH, whose assets comprise 13 small hydroelectric plants in the states of Rio de Janeiro, Minas Gerais, Goias and Espirito Santo. A sale would come under a $9.9bn non-core asset divestment plan.
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Exito Tempted Outside Colombia
Though “tremendous opportunity” remains in Colombia’s retail space, Grupo Exito is seeking greater expansion in LatAm, Jose Gabriel Loaiza, commercial VP, says. “We are on the lookout for opportunities in the region. We want to explore opportunities in Spanish-speaking countries,” the official says, speaking on a panel at the Colombia Inside Out event in New York this week. When the time comes, he explains, Exito would look at established well-run companies in Central and South America. The retailer is continuing to focus on growth in Colombia, with 50% of retail still in small hands. He also notes Uruguayan operations are catching up in terms of synergies following the 2011 purchase of Casino’s Uruguayan business for $746m. It is Exito’s only operation outside Colombia.
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Gigante Clinches Office Depot Buy
Grupo Gigante has agreed to buy the remaining 50% of Office Depot Mexico it does not own from Office Depot for MXP8.77bn ($691m), it says. The buyer has arranged a 1-year bridge loan through BBVA and Credit Suisse, according to market sources, and would likely eventually turn to the bond market to replace it. The cash deal comes after the offer Gigante made in February at the same price, and is the conclusion of a strategic process that had also contemplated an IPO for the joint venture formed in 1994. The deal is subject to regulatory approval, and is expected to close within 30 days. Bank of America Merrill Lynch advised Office Depot. Gigante did not respond to a request for comment on the transaction.
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Rede Holder Group Welcomes Second Offer
Bondholders of Brazil’s Rede Energia have welcomed a BRL3.2bn ($1.5bn) offer to buy nine Rede subsidiaries from Companhia Paranaense de Energia (Copel) and Energisa, which competes with a deal proposed last year from CPFL Energia and Equatorial Energia. The proposal is “a viable and much more valuable alternative to the plan Rede has proposed,” according to a statement from a steering group made up of some of the holders of Rede’s 11.125% perpetual notes. Calling the two “well capitalized” and “well qualified,” the group notes that the current plan was designed around a single investor team given the exclusive right to complete diligence as the basis for its proposed investment and that such exclusivity destroys stakeholder value. The new offer from Copel and Energisa includes a payment in cash as well as the assumption of part of the companies’ debt, and Energisa has asked that it be considered at a shareholder meeting scheduled for Wednesday. CPFL and Equatorial made an offer for Rede last year for a symbolic price of BRL1.00 and to the repayment of BRL2.22bn in the bankrupt utility’s debts. Rede filed for bankruptcy last year, and CPFL and Equatorial were given exclusive rights to present a purchase offer, which the bondholder group opposed, noting the existence of other qualified potential buyers.