Dutch vitamin maker Royal DSM has agreed to acquire Tortuga, a privately-held Brazilian animal nutritional supplement company, for EUR465m ($575m) cash, it says. The move is another example of a European diversifying in to higher-growth markets, as DSM tries to realign its portfolio towards emerging economies. An adjustment can be made to the purchase price bringing the total to as much as EUR490m, based on the actual 2012 Ebitda results and using the same multiple, DSM says. The deal comes at about 7.75x Ebitda multiple, based on 2012 estimated sales, according to a source familiar with the company. “If they’re going to generate value off of this, they’re going to need strong synergies, top and bottom line,” he says, noting that DSM’s nutrition segment earns 20% margins while Tortuga’s earns 16%. The company still has significant funds on its balance sheet that it doesn’t rule out using for further buys, he adds. The purchase is DSM’s seventh globally since a September 2010 change in strategy to focus on growth in its nutrition segment, the company says. The transaction is expected to be immediately earnings per share accretive, DSM says. Tortuga makes mineral supplements for production animals, selling in over nine countries in LatAm.
Category: M&A
Masisa Adds Mexico Assets
Chilean wood products maker Masisa has agreed to the Rexcel particle board business from Mexico’s Grupo Kuo for $54m plus working capital through the close of the deal, it says. The purchase, which includes a resin plant and several brands, will help Masisa grow its production and technology for resins and coating panels. The transaction is subject to regulatory approval. Masisa plans to fund the deal using proceeds from a planned $100m equity capital raise. It will put the raise to shareholders following regulatory approval. Masisa is also preparing a domestic bond.
PE Group Plots Paraguay E&P Listing
After combining three of its Paraguayan E&P units into a single entity, private equity firm Dahava Group plans to raise as much as $300m through listings on the Asuncion and London stock exchanges, it says. The firm’s local Dahava Petroleos vehicle holds the Aurora Petroleos, Boreal Petroleos and CDS Energy units, which it has bought over the last two years, spending more than $100m, according to a company official. After proving the units’ reserves, it now plans to raise up to $100m on the Paraguayan bolsa, hiring Valores to manage, and up to $200m on London’s AIM market, via Strand Hanson. The group says the oil assets should help make Paraguay energy independent. Dahava also owns two diamond mines and a black jade operation, as well as oil and gas concessions in Southern Africa.
Abertis Diversifies with Brazil Road Buy
At a time when many Spanish companies are exiting LatAm, infrastructure operator Abertis is increasing its exposure to the region, through an agreement to purchase control of OHL Brasil in partnership with Canada’s Brookfield. The pair’s joint venture has finalized the deal for control of the Brazilian toll road operation, valued at approximately $1.7bn, in which Abertis receives all of the shares of the Participes en Brasil vehicle which owns 60% of OHL Brasil, in exchange for 10% of Abertis shares, the assumption of EUR504m ($625m) in Participes’ debt and a payment of EUR10.7m. Through Abertis’ agreement with Brookfield, the Canadian asset manager comes away with 49% of Participes, and Abertis with 51%. “Abertis has a very solid cash flow situation, they have no liquidity problems so they do have the cash to do [the investment],” says a European equity analyst covering Abertis. “Europeans are in a bit of a tough position, because some of their best assets are in EM, but that is also what’s liquid today,” says a Brazil-based investment banker, noting that those who have the means will look to increase their positions as those who don’t exit. Through the deal, Abertis broadens its LatAm operations and diversifies away from deteriorating conditions in Spain’s toll road sector. Spanish toll roads should now represent 27% of Abertis’ revenues, down from 43% in 2011, according to the analyst, who notes the deal should be positive for Abertis going forward. Abertis will get a platform from which it can grow in the sector, and Brookfield, which has been present in the market for many years, will help manage the assets, the analyst says, adding that Brookfield has more than $18bn invested there so far. In a report, Credit Suisse values the transaction at 2.5%-8.9% below OHL Brasil’s current market price, calling the deal slightly negative for OHL Brasil. “While we understand the rationale behind the acceptance of this deal by OHL, namely to reduce leverage and improve cred
Regulators Say Not so Fast to Enersis Increase
Chilean regulators have found a conflict of interest in Enersis’ planned equity capital raise of up to $8.2bn and have imposed conditions on the operation, according to a regulatory filing. In the transaction announced last week aimed at stremlining holdings int LatAm, shareholders can subscribe with assets rather than cash. Enersis’ parent Endesa was expected to participate with up to $4.86bn in assets, a valuation arrived at by an outside source. Shareholders and analysts have opposed the planned capital increase, saying the Endesa assets are overvalued. The proposed transaction is a deal between two related parties, regulators found, and should be approved by an absolute majority of board members excluding those directors who represent Endesa. Regulators have ordered the electricity company to seek a new valuation of the Endesa assets, and have given the company five working days to inform how it plans to proceed. Enersis had hoped to have a shareholder vote on the process September 13. Enersis may go ahead with the capital increase if it complies with the conditions, and also may appeal against them. Even with Endesa’s 60% stake, Enersis could struggle to get enough minority shareholder votes to reach the two-thirds approval it needs. Enersis plans to use proceeds from the capital increase to fund merger and acquisition opportunities, advance greenfield projects and buy minority interests.
Repsol to Sell Ecuador Unit
Repsol plans to unload an Ecuador subsidiary as part of its broader asset disposal plans, it says. The Spanish oil company has received approval to negotiate the sale of the Amodaimi Oil Company to Tiptop Energy, a subsidiary of China’s Sinopec. The terms of the deal are yet to be negotiated, and it is expected to be completed in the short-term. Amodaimi holds a 20% share of block 16 and Tivacuno service contracts. Repsol sold its Chilean LPG unit for about $540m last month.
Brookfield, Abertis Eye OHL Brasil Stake
Brookfield Infrastructure and Spain’s Abertis are in discussion to create a joint venture to own a 60% interest in OHL Brasil, Brookfield says. It sees a $1.7bn value, comprised of $1.1bn in equity and $600m in assumed debt. Abertis would own 51% of the JV, and Brookfield and certain institutional partners 49%. If successful in acquiring the controlling 60% stake, the JV would be required to tender for the remaining 40% of the shares. The Brazilian road concession operator is currently controlled by Spain’s OHL. Brookfield would fund its investment in the JV with part of the proceeds from a planned $445m equity offering. Earlier this month Brookfield and partners agreed to acquire the remainder of the Vespucio Norte Express toll road in Chile from Germany’s Hochteif for EUR230m ($276m).
Spanish PE Takes Control of Brazilian Restaurant
Spanish private equity firm Mercapital has acquired a 70% stake in the Rubaiyat restaurant group for EUR46m ($57m), it says. The investment purchase comes as the group looks to open 10 more restaurants in the next four years, including expansion into Mexico, Peru and Colombia. It currently operates three locations in Brazil and one in Spain. Rubaiyat was founded in 1951 by Spaniard Belarmino Fernandez Iglesias, who exits his position in the transaction. His son Belarmino Fernandez, chairman since 2005, remains a minority shareholder and chairman. Santander and Uria Menendez advised the Fernandez family, while Mercapital was advised by Cuatrecasas. The purchase comes from Mercapital’s $550m fund.
Endesa Plans LatAm Streamline
Spain’s Endesa plans to consolidate its LatAm holdings into its Enersis subsidiary, in a transaction structured as an $8.02bn equity capital increase, it says. In an attempt to simplify the structure of the Spanish energy company’s generation, transmission and distribution holdings in the region, Endesa plans to contribute to Enersis the stakes it holds in 13 South American businesses, including subsidiaries of Enersis as well as Endesa subsidiaries not held through Enersis. Other shareholders of Enersis would be invited to subscribe for a matching proportional increase, payable in either cash or by contributing their stakes. The value of Endesa’s position in Enersis was valued at $4.86bn, or 60%, by an independent audit. In addition to simplifying Enersis’ structure, Endesa is looking to reduce in the gap between its Ebitda and net income, as well as reduce dividend leakage within the Enersis group. The operation could also increase the liquidity of Enersis shares, and give it more cash to continue making acquisitions and developing projects in the region. Enersis plans to hold a shareholder meeting on September 13 to approve the plan, which could become the largest capital increase in the country’s history. Enersis’ shares dropped more than 13% Thursday on the news of the plan, with analysts questioning the company’s valuation of the assets and showing concern it might overpay.
Baja Mining Project Gets Asian Boost
Baja Mining’s Boleo project in Mexico has secured $90m interim financing, it says, from a consortium made up of Korea Resources Corporation, LS-Nikko Copper, Hyundai Hysco, SK Networks and Iljin Materials. The consortium, which took a 30% interest in Boleo in July 2008, raises its stake by 21% when it provides $45m of the $90m. The consortium then has until about August 30 to fund the entire $90m, failing which, its interest would drop back to 30%. If it does commit the $90m, it would have the ablitiy to commit additional funds during a second stage. If the consortium does complete the $90m financing or participate in the second stage, Baja says Boleo’s operations would have to shut down. In the second stage, Baja is able to add a minimum of $10m to its position, up to a maximum of 40%. Canada-based Baja Mining’s only project is Boleo, a copper-cobalt-zinc-manganese project located near Santa Rosalia, in the state of Baja California Sur.