Bancolombia has agreed to pay $2.1bn cash for HSBC’s Panama operations, in a deal analysts see as slightly pricey and instantly makes the Colombian power number the two bank in a fast-growing market. HSBC, for its part, continues its pullback from LatAm. The deal comes at 3x the $700m net asset value, Bancolombia says, and around 16x-17x earnings, according to analysts. “The multiple is not the cheapest but Bancolombia gains an important position in Panama,” Katherine Ortiz, analyst at Corredores Asociados, tells LatinFinance. Her shop sees a 16.8x multiple, compared to a regional average of 16x for recent deals, but also notes the quality stats of HSBC Panama and the strong opportunity presented by the country’s market. Bancolombia gains a bank with a return on equity (ROE) of 16.6%, versus its 14.8% ROE in Colombia. Correval points out in a note that a bank with HSBC Panama’s ROE should ideally go for about 2.5x book. The bank is the second-largest in Panama, after indigenous Banco General, in terms of market share for loans and deposits, with 15% in each. Analysts also point out that Bancolombia gains a license for general lending in Panama, which it lacked previously. The multiples compare to the 2.5x assets and 15x earnings Bancolombia paid for a stake in Guatemala’s Agromercantil, and the 1.4x and 36.7x Davivienda paid for HSBC’s Central American assets. Bancolombia gets 100% of common shares and 90.1% of preferred shares of HSBC Panama. The deal includes HSBC Panama’s brokerage, fiduciary services unit and insurance company, but not its Colombian units. The transaction is expected to close during 3Q 2013, subject to regulatory approvals. UBS and Bancolombia’s own investment banking arm were the financial advisors to Bancolombia, with Sullivan & Cromwell and Tapia Linares & Alfaro as legal counsel. An HSBC spokeswoman does not return a request for comment on its advisors. HSBC acquired most of the Panamanian operations when it bought Grupo Banistmo for $1.77bn
Category: M&A
Bolivia Nationalizes Airport Group
Bolivia has nationalized Airport operator Servicios de Aeropuertos Bolivianos (Sabsa), owned by Spain’s Abertis and Aena, according to the government’s official news agency. The government cited low investment despite high profits as motivation for seizing Sabsa, which operates the country’s three largest airports, El Alto, Cochabamba and Santa Cruz. Authorities indicated that they will evaluate the compensation to be given to the owners during the next 120 days. The nationalization is the latest in a string, following the takeover of two electric utilities from Spain’s Iberdrola in January. It nationalized a Glencore mine and an electric electricity transmission company owned by Spain’s Red Electrica last year.
Brazilian PE Adds Ketchup to its Burgers
Brazilian-backed private equity firm 3G Capital has partnered with Berkshire Hathaway to purchase condiment maker HJ Heinz for $28bn, the parties say. The total value includes $5bn in assumed debt. Berkshire and 3G, a firm founded by Brazilian billionaire Jorge Paulo Lemann, are each contributing about $4bn cash to pay for the deal, with Berkshire also paying $8bn for preferred shares. The deal also includes bridge lending from JPMorgan and Wells Fargo. The buyers will pay $72.50 per share, which compares with the previous day’s $60.48 closing price. Shares closed at $72.50 Thursday. The Brazilian-backed PE shop previously made international headlines in 2010 with the $4bn buyout of Burger King, which it took public last year. Lazard, JPMorgan and Wells Fargo advised the Berkshire-3G consortium, with Kirkland & Ellis advising 3G on the legal side. Centerview Partners and Bank of America Merrill Lynch were financial advisors to the target, and Davis Polk the legal advisor. The sale is expected to close in 3Q 2013.
Divestiture Seen Rescuing AB-Modelo Deal
Anheuser-Busch InBev (AB InBev) has agreed to sell a Mexican brewery and control of the Corona brand in the US to Constellation Brands for $2.9bn, it says, a move analysts see saving AB InBev’s $20bn deal agreed last year to buy the remainder of Mexico’s Grupo Modelo. In order to appease US regulators, Constellation will take the Piedras Negras brewery and perpetual rights to Corona and the other Modelo beer brands in the US. The price implies a multiple of 9x the expected 2012 Ebitda of $310m, AB InBev says. “This move addresses the [US Department of Justice] concerns surrounding the ABI-Modelo deal as ABI has effectively no involvement or influence over any aspect of the Corona and Modelo brands in the US,” Jefferies says in a note, adding that it now expects the Modelo deal to conclude successfully. The shop calls the multiple “fair.” AB InBev still plans to sell Modelo’s 50% stake in beer importer Crown Imports to Constellation for $1.85bn, as agreed last year. The brewer notes that it now sees $1bn in revenue and cost benefits coming from the Modelo deal, higher than the $600m it had originally expected. In July last year AB InBev agreed to buy the 50% of Modelo it did not own for $20.1bn. The US Department of Justice sued to block the deal in January, on concern that AB InBev would control an unfair portion of the US beer market.
Gas Natural Sheds Nicaraguan Assets
Spain’s Gas Natural Fenosa has agreed to sell its positions in two Nicaraguan electricity distribution assets to TSK-Melfosur for $57.8m, it says. The deal includes an 83.7% position in Electricidad del Norte and an 83.7% position in Distribuidora del Sur. The buyer is a local entity owned by Spanish engineers TSK and Melfosur. Gas Natural does not expect the deal to have a significant impact on its finances.
Investor Group Adds to Aeromexico Position
An investor group led by Grupo Lala chairman Eduardo Tricio Haro has bought an 18.5% position in Aeromexico from Banamex, taking its holding to 20.2%, the airline says. The sale came at MXP16.50 per share, implying a MXP2.19bn ($172m) value, based on Aeromexico’s 717m shares outstanding as of year-end. Banamex now holds 16.1% of the airline. Tricio Haro has been an investor in Aeromexico since 2007 and following Tuesday’s transaction is to become chairman of the board.
Abril Picks Up English School
Abril Educacao, the education arm of Brazilian media conglomerate Grupo Abril, has acquired Brazilian English school Wise Up, it says, for BRL877m ($445m). The amount, subject to final adjustments, is to be paid in installments. Abril will pay BRL221m immediately, and BRL133m in year four and BRL133m in year five, acquiring 56.7% of Wise Up. This will be funded using a BRL280m 5-year revolver. The remaining 43.3% is to be paid through the issuance of 8.1m units of Abril, implying a BRL48.15 per unit price. The units closed at BRL48.00 each Friday. BTG Pactual is heard advising the target. Abril officials were unable to be reached for additional comment on the deal. Founded in 1995, Wise up has 338 franchise schools throughout Brazil.
Alicorp Adds in Brazil
Peru’s Alicorp has added to its presence in Brazil, agreeing to acquire pasta maker Pastificio Santa Amalia for BRL190m ($96m), it says. The move is part of a continued international expansion that also includes Argentina, Chile, Colombia and Ecuador. Santa Amalia specializes in pasta, chocolate, powdered beverages and other products, and took in BRL573m revenue in the last 12 months. Additional details were not available. Alicorp is considering what would be its inaugural bond issue in the international markets this year, according to DCM sources.
Millicom, EPM Close to Phone Tie-up
Millicom International Cellular has entered into exclusive negotiations with Empresas Publicas de Medellin (EPM) regarding the possible combination of their Colombian telecom operations, the companies say. No value has been announced for the deal. The pair have partnered for six years. City-owned EPM controls cable and telephony provider UNE EPM Telecomunicaciones, which in turn owns 25% of Colombia Movil. Colombia Movil operates the Tigo brand and is majority owned by Millicom. A more complete combination is being driven by UNE’s move into offering mobile service, which the pair say they would like to better integrate with the fixed telephony. An agreement would involve a shareholder agreement similar to one in place now bwtween the two. Fixed-mobile integration is also what drove Colombia Telecomunicaciones and Telefonica Moviles Colombia to merge last year. The discussions are expected to conclude during the first half of 2013.
BBVA Exits Chilean Pension
MetLife and BBVA have put terms on the anticipated sale of the Spaniard’s AFP Provida Chilean pension unit to the American insurer, with the $2bn value generally seen as fair. In the deal, BBVA has agreed to sell its 64.3% of Provida for $1.52bn, and MetLife will tender publicly for the remainder, the two parties say. MetLife will offer holders $6.04 per share for each of the 118m shares making up the public float. Provida holders can also expect another $365m in dividends as a result of the sale. Overall the valuation is seen as fair, and lower than other recent deals in the sector. “The purchase of Provida will enhance MetLife’s business mix by increasing its exposure to faster-growing and higher-return emerging markets,” JPMorgan says in a report, calling the deal “fair” and a “strategic positive.” The shop finds that the deal values Provida at 4.4% of AUM and 11x 12-month earnings. This compares to the 4.7% of AUM and 13x earnings that Prudential Financial paid for AFP Cuprum last year in a $1.5bn transaction, the most recent previous sale of a Chilean pension. BBVA was seen selling its Mexican pension at around 14.5x in October, and selling its Colombian unit at around 13.5x in January. The US insurer says it expects to boost its earnings from EM to 17%, from 14%. As part of a shift to less capital intensive products, MetLife says the deal should be immediately accretive to earnings, at approximately $0.05 per share in 2013 and $0.15 per share in 2014. BBVA expects a EUR500m ($685m) post-tax gain from the sale. The transaction also includes a small asset management business in Ecuador. MetLife is paying cash. BBVA has sought buyers for its pension-fund assets in Chile, Mexico, Peru and Colombia since May of last year. It agreed in November to sell the Mexican operation to Banorte for $1.6bn and the Colombian operation to Grupo Aval in January for $530m. Its Peruvian business remains on the block. Bank of America Merrill Lynch and law firms Sakdden Arps and Prie