UK-based security specialist G4S has agreed to acquire 100% of security provider Vanguarda Seguranca e Vigilancia, it says. The deal, for which the value is not disclosed, is done through G$S’ SSE DO Brasil unit and purchased from the founders. Vanguarda provides security personnel, security systems and monitoring services and mobile patrols to key strategic sectors such as banking, transportation, commercial buildings, education, health and public services, and Interativa provides unarmed security and facilities services. The pair’s combined revenue is approximately GBP165m ($266m), and G4S notes that the combined consideration for Interativa and Vanguarda was in line with the group’s “normal” multiple of 8x-10x the companies’ current year Pbita. Brazil is estimated to be the fourth largest security market in the world, and is expected to grow by approximately 10.5% per year, with a forecast market size of $16.6bn in 2019, G4S says. The company was not available for additional comment.
Category: M&A
Carlyle Buys into Brazilian Furniture Maker
The Carlyle Group has agreed to acquire 60% of Brazilian specialty furniture retailer Tok&Stok from founders Ghislaine and Regis Dubrule, it says. Ghislaine Dubrule is to remain as CEO of Tok&Stok following the transaction, and the founders will retain a 40% stake. Carlyle does not disclose the value of the transaction, estimated to be around BRL700m ($347m) in local media. The funds used in the purchase come out of a $1bn pool of capital managed by Carlyle’s South America Buyout Fund and the Fundo Brasil de Internacionalizacao de Empresas FIP, a local fund advised by Carlyle and Banco do Brasil. BTG Pactual is heard to have advised the retailer. The transaction is subject to regulatory approval by antitrust authorities and is expected to close in the fourth quarter of 2012. Founded in 1978, Tok&Stok generated approximately BRL1bn in sales through its 35 stores in 12 Brazilian states.
Still Seeking a Buyer, Cruzeiro Extends Buyback
The credit guarantee fund administering a tender for Brazil’s Banco Cruzeiro do Sul extended its deadline by one day, it says, and is expected to make an announcement about the fate of the bank today. The Fundo Garantidor de Credito’s (FGC) offer to buy back $1.58bn of the mid-size Brazilian bank’s debt needs 90% acceptance from creditors – it was short of this mark as of the August 28 deadline – and it must find a buyer for the troubled bank. The tender had hit 75% as of the early deadline, suggesting the 90% threshold could have been reached by Thursday’s final deadline. Finding a buyer is perhaps less certain, with rumors flowing in the local press regarding which large Brazilian bank – the buyer must have at least BRL2.5bn ($1.24bn) in assets and able to inject some BRL800m into Cruzeiro – might be interested. The tender launched in August offers about 49% of face value on six seires of dollar bonds. The FGC is offering $560 cash per $1,000 principal for the bank’s 8.00% 2012 bonds. It is also offering $510 per $1,000 for its 7.00% 2013, 7.625% 2014 and 8.50% 2015 and 8.250% 2016 bonds. Holders of the 8.875% subordinated bonds receive $260 per $1,000. Those that accepted before a September 5 early deadline receive an extra $50 per $1,000. Bank of America Merrill Lynch and HSBC are managing the tender. Brazil’s central bank seized Cruzeiro in June after finding “unsubstantiated asset items.” The bank has been under the temporary administration of the FGC during the fraud investigation.
Swiss Insurer Adds Mexican Surety
Swiss insurer Ace has agreed to buy Mexican surety bond specialist Fianzas Monterrey from New York Life, it says, paying $285m cash. The deal expands Ace’s presence in Mexico, adding to commercial property and casualty, accident and health, and life insurance operations. The transaction, which is subject to regulatory approvals and other customary closing conditions, is expected to be completed during the first quarter of 2013. New York Life is shedding Fianzas, which it bought in 2000 from Aetna and Bancomer, because it is a non-core business. Established in 1943, Fianzas provides guarantees on construction and industrial projects, and is Mexico’s second-largest surety provider. Goldman Sachs advised New York Life.
UK Shop Invests in Brazilian English Lessons
London-based private equity firm Actis has agreed to invest $68m in Brazil’s CNA, an English language training provider, it says. Part of the investment comes from Actis 4, its new global fund. CNA is looking to double in size via organic growth and acquisitions. Actis also has invested in Brazil’s Universidade Cruzeiro do Sul.
Oil Co Enters Paraguay Farm-in
UK-based President Petroleum has agreed to a farm-in agreement for two blocks in the Chaco region of Paraguay, at an expected total investment of $90m-$100m. The agreement allows for President to earn up to a 59% interest in the Pirity Block from Pirity Hidrocarburos, a subsidiary of PetroVictory, and up to a 60% interest in the Demattei Block from Crescent Global Oil Paraguay. President’s initial payment is funded through a $37m-equivalent private share offering managed by RBC and Jefferies, plus additional equity and a $15m revolving credit facility.
Fibria Continues Asset Sales
Brazil’s Fibria has agreed to sell its Losango forest assets in southern Brazil to Chile’s CMPC, it says, for BRL615m ($304m). The asset is the latest outside Fibria’s core business to be sold as a part of a long-term deleveraging plan that has included numerous debt refinancing and an equity raise this year. The Chilean pulp and paper producer plans to make the cash payment to Fibria unit in three steps. It will disburse BRL488m upon approval from the CADE antitrust regulator, another BRL122m upon approval from other government agencies and a final BRL5m upon transfer of contracts associated with the land assets. The final value could also be adjusted following due diligence, Fibria adds. Fibria bought back $514m in 2020 bonds in June, and raised BRL1.44bn through an equity follow-on in April. It sold its Corus Agroflorestal forestry assets in March, raising BRL235m. Investors, debt buyers in particular, have been largely receptive to Fibria’s continuous deleveraging efforts in the past few years, though rough conditions in the global pulp market may challenge Fibria and its peers going forward. “We are negative regarding the debt reduction prospects of Latin American pulp, paper, and forest products companies in the near to medium term. We expect [free cash flow] to continue to be pressured in 2013 as additional pulp capacity enters the market. In order to avoid negative rating actions in this environment, management teams will need to seek alternative avenues for deleveraging, including the sale of assets,” Fitch says in a report. Additional challenges for the industry include poor demand in the weak US and European economies and slower growth in EM, it says. Barclays notes the deal is positive, finding BRL650m value in the assets. “Although we see the asset sale as positive for Fibria, it was widely anticipated by the market and should not represent a major development in terms of deleveraging,” the shop says. It sees 2013 net/debt to Ebitda falling to 2.8x from
European Banks Seen Holding on to LatAm Assets…for Now
With several sales of LatAm assets by European banks already completed this year, and partial equity flotations planned, core LatAm banking assets are still unlikely to go on the block. This was the thinking of investors and other market watchers even before last week’s announcements of European bond buyback plans lifted markets. “European banks have so far avoided selling the crown jewels. My sense is that we are seeing the light at the end of the tunnel in Europe, even in Spain, and unless there is a total disaster in Europe, you’re unlikely to see big asset sales by European banks in Latin America,” Marcos Brujis, CIO at IFC Asset Management Company, a division of the private sector arm of the World Bank, tells LatinFinance. One senior Sao Paulo-based banker says Spanish banks are in a bind as Latin businesses represent their best hope for generating future profits. “For now, it’s ‘let’s muddle through. This tactic is manageable and the banks can keep things moving with IPOs and partial floats.They are doing all they can to avoid selling controlling stakes. But we will have to see whether what happens in Europe triggers a rethink,” he says. IIF chairman Charles Dallara tells LatinFinance that the twin impact of the eurozone crisis and tighter regulation in Europe has “clearly accelerated the process of deleveraging” across emerging markets, including in Latin America. “What worries me most is that the efforts to solve the problems [in Europe] in a fundamental sense are still not coming together. The rather mild relief we’ve been given in global markets over the last few weeks is likely to disappear fairly soon” he says. Still, Dallara cautions against any hasty moves by lenders. “I would certainly caution European banks against unloading their Latin assets in any across-the-board fashion. Over the next decade or two those institutions that have positioned themselves well to compete in the local markets are going to find those positions pay substantial dividends
Inmet Moves for Panama Gold
Inmet Mining plans to make an offer to acquire all of the outstanding common shares of Petaquilla Minerals, a Panamanian gold mine operator, for CAD112m ($110m), it says. The Canadian miner active in LatAm is offering CAD0.48 cash, or 0.0109 Inmet shares, per Petaquilla share. The proposal would contemplate a spinout of Petaquilla’s assets in Spain to Petaquilla holders, allowing them to keep the potential upside of Petaquilla’s only asset outside Panama. Assuming the spinout, that offer represents a 37% premium to the Petaquilla closing price on Wednesday and a 30% premium to the 20-day average price. The offer is open for 35 days and requires acceptance from 50.1% of Petaquilla holders. Dundee is advising Inmet. Inmet is developing the $6.2bn Cobre Panama copper-gold project, which is adjacent to Petaquilla’s Molejon gold mine.
PC Maker Acquires Brazilian Group
China’s Lenovo Group has agreed to buy Brazilian electronics maker Digibras, known by its CCE brand, it says, in a transaction valued at BRL300m ($147m). In exchange for 100% of Digibras, the Hong Kong based PC maker will issue 46.9m of its shares, at a price equal to the average share price 30 days prior to the completion date of the transaction, and make a cash payment bringing the total consideration to BRL300m. The cash consideration would be HKD287m ($37m, BRL75m) based on Wednesday’s HKD6.12 closing price. Further adjustments to the transaction value may be made based on net debt and working capital. Credit Suisse and CICC advised Lenovo. Digibras owns the Digibras Industria, Digiboard and Dual Mix units and posted revenue of BRL1.6bn in 2011.