Irish credit information provider Experian has agreed to spend BRL3.1bn ($1.5bn) to buy the remaining piece of Brazilian credit bureau Serasa from a group of banks, it says. The deal for the 29.6% stake had been expected since Experian originally bought control in 2007, though the transaction comes at a higher price given the growth in the industry since then. Experian will initially pay cash for the stake, and may also use existing credit facilities. The price may be subject to a cash adjustment. Experian paid $1.2bn for the first 70%, and had an option to buy a further stake, exercisable beginning June 2012. Since then, Experian has been negotiating with the group of banks to extend commercial data supply arrangements. Serasa has seen annual revenue growth of 20% and EBITDA growth of 28% over the last three years. An Experian spokesperson says that the multiple it pays in 2012 is actually slightly lower than the multiple it paid in 2007, citing growth in earnings as a key factor. Experian is paying 8.5x Ebitda for the whole 99.6%, analysts say. A recent change to legislation in Brazil expanding the amount of data used in credit checks means Serasa is likely to continue to grow quickly, with more individuals in credit databases and more frequent use of the data. Instead of simply a record of “negative” data such as defaults, “positive” “data” such as payments made will now be used in Brazil, part of a larger trend that has seen valuable risk implications in other LatAm countries. “If you can reduce the interest rates without increasing the risks to the bank then you have more stable banks and lower interest available to the Brazil consumer,” says an equity analyst covering the sector. The 29.6% interest is to be bought from BIU Participacoes – representing 24.4% and made up of the stakes of Itau and Bradesco – as well as by Banco Bradesco Financiamentos, Grupo Santander and HSBC. The deal is expected to close by the end of the year, pending shareholder and regulato
Category: M&A
ADM Set to Unload Gruma Stake
Archer Daniels Midland (ADM) has reached a preliminary deal to sell its 23.2% stake in Mexico’s Gruma to ASUR chairman Fernando Chico Pardo, according to an ADM spokeswoman. The price was not disclosed, though the 23.2% stake would be worth approximately MXP5.42bn ($418m) at the tortilla maker’s Tuesday’s MXP41.43 closing price. The agreement also includes minority positions in various joint ventures with Gruma and its affiliates, and is non-binding. Bank of America Merrill Lynch is advising ADM. The US agricultural group is currently pursuing a AUD2.7bn ($2.8bn) offer for Australia’s GrainCorp. ADM first bought into Gruma in 1996.
Cencosud Boosts Colombian Presence
Chile’s Cencosud has agreed to buy Carrefour’s Colombian business, it says, spending EUR2.0bn ($2.6bn) to gain about 18% of the country’s supermarket sector. The transaction is the latest example of a foreign player entering Colombia’s high-growth economy, and follows notable deals in the financial sector. Carrefour’s operations are second only to Grupo Exito, in a market with plenty of growth opportunity. “Retail has been a very attractive segment for foreign investment and is a sector that can continue to grow as the country grows,” Jorge Zuniga, equity analyst at Interbolsa, tells LatinFinance. Cencosud and others can still add a lot, particularly in less penetrated medium-sized cities, he adds. Smaller participants – Almacenes Olimpica La 14 and Alkosto are among the next largest – could also become targets for foreigners. The deal is seen coming at about 17x Ebitda. Cencosud will fund its purchase with a $2.5bn loan from JPMorgan. Credit Suisse advised the seller. The transaction is expected to close by the end of the year. Cencosud is Latin America’s third-largest retailer, operating supermarkets, malls, and department stores in Chile, Brazil, Peru, Argentina and Colombia, where it has had a smaller presence since 2007. Carrefour’s sale comes under a strategy of focusing on markets where it holds or aims to develop a leading position. The French company entered Colombia in 1998, and counts 72 hypermarkets, 16 convenience stores and 4 cash and carry stores, representing sales of EUR1.5bn in the 12 months to June 30.
Swiss Insurer Adds in Mexico
Swiss multiline property and casualty insurer ACE has agreed to buy Mexico’s ABA Seguros from Ally Financial for $865m cash, it says. Mexico’s fourth-largest auto insurer is the latest regional financial asset to change hands, as international and regional players seek expansion and high growth rates. For Ally, the move represents a continuation of the American automotive financial services group’s plan to shed non-core international assets to better focus on US operations. ACE, a longtime operator in Mexico, is seen as better equipped to expand the business as demand for insurance products grows along with the economy.”ACE is in the position where it can add to the capital position [of ABA] if it wants to,” Paul Newsome, analyst at Sandler O’Neil, tells LatinFinance. Though the disclosure on the ABA sale is not sufficient to make a judgment on value, he notes ACE has a strong track record with international acquisitions. ACE says it expects the deal to be accretive to earnings in the first year and to meet or exceed the company’s long-term return on equity target – about 15%, according to analysts – by the third year. Canadians TD and Scotiabank were said to be among the other interested bidders. The transaction is expected to be completed during the first half of 2013 and is subject to regulatory approvals. Spokespeople from both parties decline to comment on the financial advisors. Sullivan & Cromwell were legal advisors to Ally. ACE operates in 53 countries, including Argentina, Brazil, Chile, Colombia, Ecuador, Panama and Peru. It operates ACE Seguros in Mexico, and last month agreed to buy Fianzas Monterrey from New York Life Insurance Company for about $285m. Ally announced earlier this year the intent to seek strategic alternatives for businesses in Brazil, Mexico, Chile and Colombia.
Miner Continues Mexican Selloffs
AuRico Gold has sold out of its position in Mexico’s Endeavour Silver in a CAD95m ($97m) block trade, Endeavour says. The sale comes a week after the Canada-based miner operating in Mexico sold $750m in mining assets to Carlos Slim’s Minera Frisco. The 11m shares in Endeavour, also a Canadian Miner operating exclusively in Mexico, were sold at CAD8.60 each. CIBC, BMO Capital Markets and Dundee Securities managed the sale.
Primav Clinches EcoRodovias Stake
Italy’s Impregilo has accepted a BRL2.02bn ($995m) bid from Brazilian construction company Primav Construcoes for a 19% stake in EcoRodovias, EcoRodovias says. The BRL19.00 per share price for the 106m shares represents an offer sweetened last week from the BRL17.90 offered in July. The offer represents a 5% premium to the previous day’s closing price, Impregilo says, a 15.6% premium to the average price in the last six months, and an 11x Ebitda multiple. EcoRodovias shares closed Wednesday at BRL17.40. Primav, which is controlled by the Brazilian conglomerate CR Almeida, already owned 45% of EcoRodovias. Impregilo maintains a position in EcoRodovias of about 10%, though said Wednesday that it was evaluating an offer from BTG Pactual to buy 3.7% at BRL16.50 per share. It plans to use the proceeds to pay down all of its financial debt. The Italian group will also evaluate using some of the proceeds for a dividend payment, it says. Bank of America Merrill Lynch advised Primav and Banca IMI advised Impregilo. The transaction is expected to close by the end of the year.
Canacol Takes Over Peer
Canacol Energy, a Canadian oil company operating in Colombia, Brazil and Guyana, has agreed to take over Shona Energy, it says, in a deal worth $148m. The deal gives Canacol five exploration blocks representing 15.8m barrel of oil equivalent (boe) reserves belonging to Shona, a US oil and gas company operating in Colombia and Peru. In the deal, each Shona common share will be exchanged for CAD0.09 ($0.09) and 1.06 Canacol shares, and each Shona preferred share exchanged for $100 cash. The total value is approximately $148m, according to a Canacol spokesman, and the consideration represents a value of approximately CAD0.56 per Shona common share, based on the volume weighted average price of the Canacol shares for the 15 trading days ended October 12. Canacol shares closed at CAD0.59 Tuesday, and Shona CAD0.46. Canacol should issue 246m new shares in total. After the arrangement, Canacol plans to consolidate its shares on a 1-for-10 basis to reduce the total number of shares to 86.5m. Canaccord Genuity advised Canacol and AltaCorp advised Shona. The transaction is subject to shareholder and regulatory approvals and is expected to close on or around December 20. The combined company should have total reserves of 32m boe.
Pair Considers Rede Buy
Brazilians CPFL and Equatorial Energia have signed a letter of understanding for the possible purchase of troubled power company Rede Energia, Rede says. Equatorial, which last month agreed to buy power distributor Centrais Eletricas do Para (Celpa) from Rede, and CPFL would jointly control Rede, through the deal will hinge on Rede’s restructuring plan receiving approval from Brazil’s electricity regulator and from creditors. In late August, authorities seized eight units of Rede in efforts to prevent interruption in electricity service in six states. No financial details were disclosed.
Duratex Launches Tablemac Tender
Brazil’s Duratex has launched an offer to buy up to 12% of the publicly traded shares of Colombia’s Tablemac, it says. As part of its plan to eventually obtain as much as 52% of the industrial wood panels specialist, it will look to spend as much as COP48.72bn ($27m) to buy up to 4.06bn shares at COP12.00 each, it says. The offer will take place October 17-30, with allocations November 1. In May Duratex agreed to buy 25% of the Tablemac for $56m, at the same price. Under the agreement in May, Duratex can, within the next 2 years, opt to buy another 15% at the same per-share price adjusted by an annual rate of 6.25%.
Primav ups EcoRodovias Bid
Brazilian construction company Primav Construcoes has increased its offer to buy a BRL2.02bn ($1bn) stake of shares in EcoRodovias from Italy’s Impregilo. Primav is offering BRL19.00 per share, up from 17.90 offered in July, for 106m shares, EcoRodovias says. The offer represents a 50% premium to the previous day’s closing price. EcoRodovias shares closed Wednesday at BRL18.13. The offer for the stake representing about 19% of the toll-road operator is valid through October 18. If accepted, Impregilo would still maintain a position in EcoRodovias of about 10%. Primav, which is controlled by the Brazilian conglomerate CR Almeida, already owns 45% of EcoRodovias.