Petrobras has agreed to buy 100% of the Araucaria Nitrogenados fertilizer plant from Vale, it says, for $234m. The state-controlled oil producer will pay the miner using the revenues from the leasing of mining rights owned by Petrobras to Vale. Petrobras says the plant, located in the state of Parana is complementary to its existing fertilizer production assets. The transaction is subject to regulatory approvals.
Category: M&A
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Sao Martinho Buys Mill from Biosev
Sao Martinho has agreed to buy a sugar processing mill from fellow Brazilian Biosev, Sao Martinho says, for BRL200m ($95m). The deal includes the sale of the Sao Carlos mill, with a 1.85m ton annual crushing capacity, and an adjacent sugar-cane planted area. Also, Sao Martinho will supply 1m tons of sugarcane in the first year of operation. Biosev, a unit of Louis Dreyfuss, has been seeking to focus on operating plants with higher capacity.
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Slim Adds Spanish Properties
Carlos Slim is not done acquiring assets from struggling Europeans, agreeing to buy a package of properties from Spain’s CaixaBank for EUR428m ($571m), CaixaBank says. The billionaire’s Inmobiliaria Carso entity has bought the 439 properties under a sale leaseback transaction and will lease them back to the Catalan lender under a long-term agreement. Caixa sees a EUR200m pre-tax gain from the sale.
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Gruma Buys Stake from ADM
Mexico’s Gruma has purchased a $450m package of its shares and shares in its subsidiaries from Archer Daniels Midland (ADM), it says. The deal is the result of Gruma acting on a right of first refusal to block an offer made last month by Mexican businessman Fernando Chico Pardo. The package includes a 23.2% stake in Gruma, as well as minority positions in its units Azteca Milling, Molinera de Mexico and three Venezuelan units. An additional $60m could be paid to ADM depending on the share price performance as well as other factors over the next 3.5 years. To fund the purchase, Gruma has signed a 1-year $400m bridge loan led by Goldman Sachs, and a long-term revolver from Bank of America Merrill Lynch. It plans to refinance the debt within a year. Bank of America Merrill Lynch advised ADM, which has been unloading assets in order to pursue a AUD2.7bn ($2.8bn) offer for Australia’s GrainCorp.
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KOF Goes to Asia
Coca-Cola Femsa (KOF) has agreed to pay $689m to buy 51% of Coca-Cola Bottlers Philippines from Coca-Cola, it says, in the Mexican bottler’s first buy outside of LatAm. It enters a market that the company and analysts see as having a similar profile to the LatAm countries where KOF already operates. Analysts find the price to be reasonable, at 13.5x 2012 Ebitda. The multiple of $2.50 per unit case, Banorte says in a note, is in line with the $2.50-$3.00 level the shop would expect. “This multiple compares favorably with the $5.00 multiple the company has paid in its recent Mexican acquisitions,” Banorte says. The annual sales of Coca-Cola Bottlers Philippines is only about 27.5% of KOF’s Mexico operations, Monex says in a note, adding that the Philippine beverage industry should double in the next 10 years. The call and put options KOF retains make the deal even more favorable. It has an option to acquire the remaining 49% of the bottler good for the next seven years, as well as one to sell its stake back to Coca-Cola after six years, both at the same multiple. The deal is all cash, and KOF plans to fund it with $700m in short and medium-term bilateral bank loans, according to Fitch, which considers the debt “manageable.” Officials do not respond to request for additional information on the loans. KOF expects pro-forma net leverage of 0.7x and a coverage ratio of 19.7x, both ensuring continues access to the capital markets. KOF will be managing the day-to-day operations of the business, with Coca-Cola keeping certain rights on the operational business plan. The deal is expected to close in early 2013. Allen & Company and Rothschild were financial advisors to KOF, with Cleary Gottlieb and Salazar Hernandez & Gatmaitan working the legal side. Skadden Arps was counsel to Coca-Cola.
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Alsea Adds to BK Holdings
Mexico’s Alsea has formed a joint venture with Burger King Worldwide into which both parties will place their Burger King restaurants in Mexico. In the deal, Alsea pays an undisclosed sum in exchange for majority control of the JV, made up of 203 restaurants. An Alsea official did not respond to a request for more information, though Alsea states that the deal comes at a 7x EV/Ebidta value. “The transaction is positive for the company and in line with its business strategy,” Monex says in a note, seeing 30% sales growth in 2013, up from 26% this year.
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Fibra Uno to Grow
While Macquarie’s IPO may be taking the spotlight this week, the pioneer of the Fibra class, Fibra Uno, is remaining active. The fund controlled by the El-Mann family is planning to buy a 30-property portfolio that should mean a MXP18.4bn ($1.44bn) investment, Fibra Uno says. About 76% is industrial property, with the remainder commercial and office space. Highlighted by the Torre Reforma Latino, the portfolio has 21 properties generating income and 9 in development. The portfolio is estimated to be generating MXP860m annually. Some 46% of the payment will be in shares, 23% in assumed debt and the remainder in funds for construction investments.
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Diageo Puts Cap on Tequila Talks
Diageo has pulled out of talks to buy a stake in Mexico’s Jose Cuervo, it says, after the two companies had been discussing price for more than a year. Cuervo, with a value estimated at $3.5bn-3.5bn, has a distribution deal with Diageo due to end in June 2013, leaving the global spirits company without a major tequila brand. Diageo had been expected to take a stake in Cuervo with the possibility of gaining majority control at a later date. Barclays had been advising Curevo and Goldman Sachs working with Diageo.
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Interregional Buys Push M&A Volume Past 2011
LatAm’s M&A volume is set to finish this year up from 2011’s total, driven by non-LatAm buyers acquiring in the region, a trend which bankers see getting even stronger in 2013. There has been $163.25bn in announced M&A volume this year through Tuesday from 1,695 transactions, according to Dealogic data, already eclipsing 2011’s full-year total of $158.98bn. This year’s total is boosted by the $20bn sale of 50% of Mexico’s Modelo to AB Inbev, one of several international moves into LatAm by Europeans, Asians, and increasingly, Americans. “We have seen the comeback of the Americans. This year we have seen resurgence in US players interested in Latin America. Corporates in the US have a lot of cash, they are looking for growth, and Latin America is right next door,” Nicolas Aguzin, LatAm CEO at JPMorgan until moving last week to head Asia, tells LatinFinance. JPMorgan looks set to lead the M&A tables this year, booking $55.52bn in volume to date, ahead of Bank of America Merrill Lynch ($51.16bn) and Credit Suisse ($39.29bn). Aguzin notes that an integrated approach to the business – and an ability to offer loans, ECM, and DCM access – will be key in 2013. He expects to see an increasing number of bond takeouts for M&A in the region, such as happened with Cencosud’s $2.6bn purchase of Carrefour’s Colombian assets. Bankers expect regional players such as Cencosud to continue expanding, driving the volume along with foreign entrants and additional European exits. Large transactions are also likely to be a theme. “Big deals are getting done as easily, if not more easily than small deals,” says a head of LatAm M&A. He notes that there have been more than 50 deals this year of $500m-plus, compared to around 40 of $300m-$400m size. This year’s M&A wallet, at $564m, will need a push in the next two weeks to catch the $573m fee pool from 2011. BTG Pactual leads with $104m, followed by Credit Suisse ($70m) and Itau ($46m). JPMorgan is fourth with $42m.
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Bunge Unloads Brazil Fertilizer Assets
Bunge has agreed to sell its fertilizer operations in Brazil to Norway’s Yara International for $750m cash, the companies say. The deal is consistent with M&A trends in the region, with one international player selling in Brazil to streamline its operations and another paying a premium for expansion in a high-growth market. “It is somewhat expensive if they are unable to complete the transition Bunge started, but if they are able to complete the process, it doesn’t seem like a high price,” Jeffrey Stafford, analyst at Morningstar, tells LatinFinance. He notes that Bunge had struggled to realize the profit potential from the Brazilian blending and distribution operations following the 2010 sale of Brazilian phosphate mining assets to Vale. Yara, which already operates in eight LatAm countries including Brazil and has prioritized international expansion, says it should see $25m in synergies by 2014 from the addition. Friday’s deal comes at EV/Ebitda of 10x, SEB Enskilda says, a “dilutive” level, that, if the synergies are achieved will appear closer to fair value in the long-run. Bunge and Yara have also agreed to enter into a long-term fertilizer supply agreement. The deal is expected to close in the second half of 2013, and is subject to regulatory approvals. Credit Suisse, Souza Cescon Avedissian Barrieu e Flesch and Shearman & Sterling advised Bunge. Yara did not use external advisors, a spokesman says. US-based Bunge continues its various agribusiness operations in Brazil, and will hold on to one port asset that was part of its fertilizer distribution business. It also operates in Argentina, Colombia, Paraguay, Peru and Uruguay.