Peru was at the center of Latin America’s M&A markets in March and April, amid a quieter than expected start to the year. Latin America-targeted M&A volume was $18.2 billion […]
Category: M&A
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Telefonica Sells CentAm Stake to Pay Debt
Spain’s Telefonica has agreed to sell 40% of its assets in El Salvador, Guatemala, Nicaragua and Panama to Guatemalan family-owned conglomerate Corporacion Multi Inversiones for $500m, it says, to raise funds to pay off debt. The process will involve creating a holdco for the assets in these countries, and includes the payment of an additional amount of up to $72m, determined by the future performance of the assets. Analysts were positive on a multiple seen at 6.5x Ebitda, especially considering that Telefonica is selling a minority stake. This move is part of a larger strategy to raise funds from its most valuable assets without ceding control anywhere, say analysts, noting a minority stake in Colombia or divestments of assets in Europe might be next. It could also choose to IPO in countries where it is unlikely to find a minority partner, according to one industry analyst. Telefonica is looking to decrease its debt from EUR51bn ($67bn) to a targeted EUR47bn at the end of this year. “They clearly are operating out of the most economically challenged home market in Europe,” another industry analyst says. “Their debt after buying Vivo is far too high,” he adds. In 2010, Telefonica raised its offer three times to acquire the 50% it did not already own in the Brazilcel JV from Portugal Telecom, paying EUR7.5bn for the stake. With it came 60% of Brazil’s Vivo Participacoes. Officials at each company were unable to provide details on advisors.
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UNH Clinches Amil Tag-Along
UnitedHealth has completed a tag-along offer for Amil shares, that takes it to 99.18% ownership of the Brazilian health care provider, enough to force a delisting of Amil as planned. The American is spending BRL2.88bn ($1.43bn) to acquire an additional 90.5m shares, or 24.68%, at BRL31.80 per share, representing the BRL30.75 price it agreed to pay Amil’s controllers in October plus a Selic correction. UnitedHealth agreed to pay $4.9bn last year for 60% of Amil, a deal seen as coming at more than 25x price/earnings at the time.
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Sura, Scotia Split BBVA Peru Pension
BBVA has agreed to sell its BBVA Horizonte Peru pension fund for $544m, it says, to Grupo Sura and Sctotia’s Profuturo. The pair of buyers will each take 50% of the last of the four pensions the Spanish bank had been looking to sell. The value includes a $516m price and a $28m dividend. Horizonte manages about $9bn of deposits in Peru. BBVA has exited from its Chilean, Mexican and Colombian pensions since October, as part of a planned divesture. Colombia’s Sura, for its part, has expanded, through the purchase of ING’s LatAm pension assets in 2011. Goldman Sachs has been advising BBVA in the sale of its pensions in the region. Scotia did not use and outside advisor, and a Sura spokesman was unable to comment.
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Brazilian Educators Merge
Brazil’s Kroton Educacional has agreed to buy peer Anhanguera Educacional for BRL5.0bn ($2.49bn) in an all-stock deal, the companies say, in order to take better advantage of consolidation possibilities in the sector. Kroton will issue 198.8m new shares to pay 1.36 shares for each Anhanguera share, indicating a BRL5.0bn price at the previous session’s BRL25.50 close. Kroton will have 57.48% of the new company and Anhanguera 42.52%. Ananguera shares closed at BRL36.80 Monday, and Kropon at BRL27.75. “This is a very positive acquisition, that puts these companies on another level,” Sandra Peres, analyst at Coinvalores, tells LatinFinance. The two complement each other geographically, as well as in terms of strengths, with Kroton stronger in distance learning and Anhanguera in class-based instruction. “We have seen a great period of organic growth for these companies. Together, the combined company will be better prepared to take advantage of this organic growth,” Kroton CEO Rodrigo Galindo, who will be CEO of the combined entity, says on a conference call. He notes that valuations in the sector have been creeping up recently, making acquisitions – a major source of growth for all of Brazil’s large for-profit education players in recent years – more difficult going forward. This is another motivation for the merger. Ananguera’s Gabriel Mario Rodrigues will serve as chairman. The combined entity will represent BRL4.3bn revenue in 2012, and 1m students, with a market cap of about BRL12bn. Kroton did not use outside advisers, a spokesman says, and an Anhanguera spokeswoman was unable to provide information on advisors. The deal is subject to regulatory approval.
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Homex Unloads Prison Stakes to Slim
Homex has agreed to sell its position in prison assets in the states of Morelos and Chiapas to Carlos Slim’s Ideal and Inbursa, it says, raising MXP4bn ($328m). The troubled Mexican homebuilder plans to use half of the proceeds for working capital and the rest for repaying debt. It expects to stay on as builder of the prison in Morelos and to participate in the operations of both prisons. The homebuilder’s 2015 bonds rose about 30 points Friday to trade in the mid-80s, according to a trader. Homex and peers Urbi and Geo have seen recent ratings downgrades with heavy debt payments and poor sales. Geo has hired Fians Capital and Urbi has contracted Rothschild to advise on debt restructuring options. Urbi said it is invoking a 30-day grace period on a $6.4m due last week.
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Glencore to Sell Copper Project
A $5.2bn mining project is going on the block in Peru in the next three months, after Glencore was ordered to divest its stake to get regulatory approval for a merger with Xstrata. China’s commerce ministry approved the merger of the two mining firms provided Glencore divests its stake in the project, which is under construction. Chinese miners Jiangxi Copper, Chinalco Copper and China Minmetals are cited by one analyst as potential buyers. Chinalco has less incentive, because it already has a large project due to come online in 2014. Jiangxi and China Minmetals have projects in northern Peru that have been held up, so they might be interested buyers, says the analyst. Large diversified miners like Rio Tinto or BHP might be constrained from bidding by a focus on cost control, the analyst says. Construction of Las Bambas, including some infrastructure and machinery, is set at $5.2bn and due to be finished at the end of 2014, with the first full year of production expected for 2015. The mine is expected to produce 400,000 tons of fine copper every year for the first 5 to 10 years, and to run for 20 years or more, say analysts.
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Slim Plans Brazil Integration
America Movil is planning to integrate its operations in Brazil, it says. Fixed-phone company Embratel Participacoes, mobile operator Claro and cable television unit Net Servicos de Comunicacao would be merged, following what the Carlos Slim company did in Mexico with AMX and the Telmex entities. Details of the plan, expected to reduce costs, should be revealed at a later date. The timing is unclear.
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Herdez Moves for Nutrisa Shares, Evaluates Refi Options
Grupo Herdez will analyze refinancing options this year as it closes in on the 100% share acquisition of Mexican health and nutrition food company Grupo Nutrisa for as much as MXP2.98bn ($246m), Treasurer Marcel Gay Soto, tells LatinFinance. “We want an equilibrium of bank loans and domestic [bond] market financing at efficient costs and rates,” he says. The size of either transaction, to refinance a 2-year bank loan, remains to be determined. Herdez is considering a 10-year fixed-rate domestic bond transaction and a 5-year loan. Herdez launched Wednesday a public tender for the 33% of Grupo Nutrisa shares it did not buy directly in a January deal, it says. The food products company is offering the same MXP91.00 per share price it paid in January for the remaining shares. It targets 32.7m shares total that would give it 100% ownership. GBM is handling the tender. Nutrisa shares closed at MXP85.00 Thursday.
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Tuscany Hires Duo to Explore Alternatives
Canada-based LatAm-focused Tuscany International Drilling has hired Citi and Black Spruce Merchant Capital as financial advisors as it looks to explore strategic alternatives, Tuscany says. It has also hired McCarthy Tetrault as its legal advisor for the process, and would look to take action as soon as this year, depending on market conditions, says a person familiar with its plans. A second person familiar with the matter says Tuscany is likely looking to increase its perception in the marketplace – the company’s value is currently significantly less than its breakup value. Tuscany is unlikely to be looking to sell, says the first person familiar with its plans, but rather, looking to build on its platform of assets in Central America, South America and Africa via options such as a private equity partner, merger, or bolt-on acquisition. Tuscany has a $51m market cap. CEO Reg Greenslade resigned in February, replaced by founder Walter Dawson. It pulled what would have been a cross-border bond debut in December.