Eike Batista’s EBX Group has signed a deal with IBM that includes selling the US company a 20% stake in Six Automacao, EBX’s technology company. The deal also contemplates a 10-year $1bn IT outsourcing contract where IBM will handle EBX’s IT operations, the Brazilian company says. Both companies will also create a center to develop technology solutions for infrastructure and natural resources. EBX declines to say if IBM paid for the 20% stake in its subsidiary or if the stake was given as payment for the $1bn services contract. Officials at EBX decline to comment further and IBM officials could not immediately comment on the details of the deal. If the stake in the EBX subsidiary was agreed as payment for the $1bn contract, this would put a $5bn value on EBX’s unlisted technology subsidiary. The IBM agreement comes just days after Batista sold a 5.63% stake in EBX to the Abu Dhabi sovereign wealth fund, Mubadala Development company, for $2.0bn, a price that valued the group overall at $35.5bn.
Category: M&A
HRT Seeks Namibia Partners
Brazilian oil and gas company HRT Participacoes em Petroleo is seeking partners for a farm-out agreement involving its exploration assets in Namibia. HRT aims to sell a 25%-30% stake in participation in 10 exploration blocks in the Walvis, Orange and Namibe off-shore basins, an HRT investor relations official says. The final stake to be sold, however, will depend on the eventual negotiations with companies interested, who are now reviewing the project’s data. The data room stage is expected to last up to 3 months, the official says, followed by negotiations which should reach a conclusion sometime in 4Q 2012. The farm-out should bring in a partner willing to finance the exploration of a number of blocks. HRT has retained Citi as the sole advisor in the process.
Telefonica Cleans Up Balance Sheet with Colombian Merger
Spain’s Telefonica has struck a deal to merge its Telefonica Moviles Colombia unit with Colombia Telecomunicaciones, a company itself majority owned by Telefonica, the company says. A key catalyst for the merger is Telefonica’s attempt to cement its balance sheet, which would see a reduction in net debt of EUR1.3m ($1.7bn), Telefonica says. The merger will result in Telefonica controlling 70% of the merged entity with the Colombian government holding the remaining 30% stake, with a right to increase that stake by 3% in 2015. Currently Telefonica owns a 52% stake in Colombia Telecomunicaciones with the government holding the rest. As planned, the deal would involve the Colombian government assuming its 48% share of the telecom company’s debt obligations and extending the payment date of other outstanding debt held by the Patrimonio Autonomo Receptor de Activos, Parapat, until 2028. Officials at Telefonica in Madrid could not comment further on the transaction. The merger will become effective once shareholders from both companies vote on the plan on April 24th.
Xstrata Sells Chilean Generator
Global miner Xstrata has sold off a 51% interest in Energia Austral, a hydroelectric development in Chile, to Origin Energy. The deal contemplates Origin Energy’s coverage of an initial $75m in development costs to complete a detailed project study, plus an additional $75m for final investment, Xtrata says. The deal also involves additional deferred payments to Xstrata when certain operational thresholds are met by Origin Energy once the project is operational, but details were not released. Officials at Xstrata declined to offer additional information on the deal, while Origin Energy officials could not immediately be reached for comment. Energia Austral hydroelectric projects comprise 3 plants, to provide roughly 1,000MW of power to the Chilean grid. The projects are now in the phase of a feasibility study and a final investment is scheduled for as late as 2016.
Brazil’s Odebrecht Ups Stake in Peru Pipe
Brazilian infrastructure developer Odebrecht has struck a deal to purchase the 49% stake it doesn’t already own in the Gasoducto Andina del Sur pipeline project in Peru, also known as Kuntur, from its partner Conduit Capital Partners (CCP). Officials at CCP declined to offer additional details of the deal, while Odebrecht officials could not immediately be reached for comment. Odebrecht originally acquired a 51% stake in the $3bn venture in April 2011. As designed, the 1,100km pipeline project would link the Camisea fields to Southern Peru’s Port of Ilo. The cost of building the Kuntur project doubled to $3.0bn from its original estimate as the construction of a parallel pipeline is required to transport gas liquids resulting from natural gas extraction. Conduit first invested in Kuntur when the project received a 30-year concession for the pipeline construction in 2008.
Camargo Aims for Total Control of Cimpor
Brazil’s Camargo Correa has launched a takeover offer for the 66.75% it does not own of Portugal’s Cimpor, it says. Acting through its InterCement Austria unit, Camargo could spend as much as EUR2.4bn ($3.2bn) through the offer to pay EUR5.50 per share for the 444m shares it doesn’t own in the cement company. The offer price represented a 10% premium to Friday’s EUR5.00 closing price. Cimpor shares closed Monday at EUR5.47. The Brazilian conglomerate says it aims to further both its own and Cimpor’s international expansion, and to continue to build a balanced portfolio between mature markets and markets with high growth potential. It would also seek to merge InterCement’s cement and concrete assets in South America and Angola with Cimpor. It does not give any timetable for the offer. Camargo has previously attempted to take over Cimpor, and arrived at its current position in 2010 following a failed takeover attempt from Brazil’s CSN. Portugal’s Caixa Geral de Depositos bank has said it would sell its 9.58% holding to Camargo, if Brazil’s Votorantim, which owns 21.2% and has first refusal on Caixa’s shares, passes. A takeover of Cimpor would need to be approved by regulators in Brazil, Portugal, Spain, Turkey, South Africa, Egypt and Tunisia.
Diageo Plans Tequila Binge
Global spirits maker Diageo is exploring the purchase of Jose Cuervo, Mexico’s storied tequila maker, which is valued at $2.9bn-$3.4bn. So far, Cuervo has retained the advice of Barclays, while Diageo is being advised by Goldman Sachs, a person familiar with the talks says. Discussion between the companies is “complex,” the person says, since it is still unclear whether the deal will result in a complete purchase of all of Cuervo’s assets. Diageo and Jose Cuervo officials could not immediately be reached for additional comment. The merger talks have sprung from Diageo’s bid to acquire the company, leveraging an agreement between the companies to distribute Jose Cuervo internationally. Diageo officials have publicly expressed reluctance at renewing the distribution deal when it expires next year. The relationship with between Diageo and Cuervo has seen its ups and downs. Cuervo sued Diageo in the late 1990’s to take back its US distribution rights but the companies settled the dispute in the early 2000s with a new deal that now expires in 2013.
Brazilian Leads as 1Q M&A Volume Sags
LatAm targeted M&A volume hit $27.1bn in 1Q 2012, down 27% from $37.3bn 1Q 2011, according to Dealogic data, with Itau leading the league tables. The Brazilian bank, whose announced work in the quarter includes last week’s purchase of a $2bn stake in EBX by Abu Dhabi’s Mubadala sovereign wealth fund, booked $10.31bn from 8 deals. Citi finished the quarter in second place, with $8.85bn from 2. The two shops climb up from respective third ($8.5bn) and sixth ($5.1bn) positions in 1Q 2011. Bankers say they are optimistic that volume can increase this year, perhaps topping last year’s total. “The key is continued stability in Europe and more positive news from the US,” a senior LatAm banker says. The EBX deal, as well as the possible Camargo Correa bid for Portugal’s Cimpor and move for Jose Cuervo by global spirits company Diageo that have emerged this week, each possibly topping $2bn, appear to be moves in the right direction. Brazil remained the most targeted nation in 1Q, with $21.1bn announced, though this volume was down 14% from 1Q 2011. Second placed Chile saw an increase to $3bn in 1Q 2012 from $2.3bn in 1Q 2012. Finance was the most targeted sector in the region with $8.6bn – Itau’s $6.8bn move for Redecard was the eighth largest globally in 1Q – followed by real estate with $3.3bn. LatAm’s total was its lowest since the $20.6bn it registered in 4Q 2009. The region’s total compares to $162.2bn in 1Q EM-targeted M&A volume in 1Q, down 21% from a year ago.
IFC Eyes Stake in Brazil Pharma
The World Bank’s International Finance Corporation (IFC) is considering a $50m investment in pharmaceutical retailer Brazil Pharma, it says. The investment would be a combination of an acquisition of the company’s equity and an IFC loan, according to a proposed investment summary. A spokeswoman for Brazil Pharma says the deal would help fund the company’s growth, but notes that the exact investment details still remain under discussion. A spokeswoman at the IFC did not return a call for comment. The Brazilian company currently has a presence in over 13 states, out of 27 in the South American country and it is in the process of expanding its reach. In early February, the company acquired Sant’Ana Drogaria Farmacias for a BRL495.7m ($288.3m) price tag.
Pacific Rubiales Ups Stake in Port Venture
Pacific Rubiales has increased its stake in infrastructure development company Pacific Infrastructure, which is erecting a port and pipelines in Cartagena, it says. The Colombian oil company has agreed to purchase 140m shares at $1.00 a share, for a total purchase price of $140m. The deal leaves Pacific Rubiales with a 61.5m share, or 30%, position in Pacific Infrastructure. Officials at Pacific Rubiales and Pacific Infrastructure could not immediately be reached for comment. As part of the deal, Pacific Rubiales will also fund the subscription in tranches of $20m for the venture’s working capital during the coming year. Panama-based Pacific Infrastructure is responsible for the Puerto Bahia port project and the pipeline linking Covenas with Cartagena. The energy company is looking for a way to expand its storage capacity down the line as it intends to increase its production capacity going forward, it says.