Mexico’s anti-trust regulator has opened a window of opportunity for the potential approval of Televisa’s $1.6bn acquisition of a 50% stake in wireless provider Iusacell after saying it would reconsider its decision to block the transaction. “If the companies present agreements that resolve some of the competition problems” in the television advertising market that would result from the tie up, regulator (Cofeco) said it would authorize the merger. The announcement came just days after the regulatory agency officials voted 3-2 in favor of blocking the merger arguing that an incentive would exist to fix advertising rates. Iusacell is owned by billionaire Ricardo Salinas Pliego, who also controls TV Azteca, the second largest broadcaster in the country after Televisa. Iusacell’s deal with Televisa is seen as part of the company’s strategy he company to build its strength to compete with corporate titan Carlos Slim who controls roughly 70% of the telecom business in the country. In the acquisition as structured, Televisa has invested $37.5m in Iuscacell equity, and another $1.565bn in Iusacell convertible debt paying 2% with a December 2015 conversion date. Iusacell, Mexico’s third largest cellular services company, has already begun using the invested funds. At the time of the transaction, Barclays estimated the deal came in at a pricey 21x EV/Ebitda multiple, using Iusacell’s 2009 Ebitda of $150m. The Televisa’s ADRs remained unchanged on Tuesday at $19.88 following the regulatory announcement.
Category: M&A
Brazil Auctions $14.2bn in Airport Concessions
Brazil managed to generate BRL24.53bn ($14.2bn) from investors in a licensing auction that opened the door for the private sector to modernize the country’s key airports. Brazil’s Investimentos e Participacoes em Infraestructura, Invepar, a construction company holding, and its partner Airports Company South Africa (ACSA), secured the concession for Sao Paulo’s Guarulhos airport by bidding BRL16.213bn. The 20-year concession with a year extension will be operated by a company 51% owned by Invepar and ACSA with the remaining 49% to be held by Brasileira de Infraestrutura Aeroportuaria, Infraero. The concession for the Viracopos airport in Campinas went to the group led by Triunfo Participacoes, with a BRL3.821bn bid, for a project that will require a roughly BRL8.7bn investment. The airport of Brasilia was won by Brazilian construction firm Engevix together with Argentina’s Corporacion America by bidding BRL4.5bn. The companies are expected to pay the initial installments of these investments next year and to pay the government a fee over the life of the concessions. It remains to be seen how the partners choose to finance their capital outlays for the projects.
Cemex Ups Bid For Ireland’s Readymix
Mexico’s Cemex has increased its bid for a stake in Irish company Readymix that it doesn’t already own. Cemex has decided to increase its offer to EUR0.25 per share of Readymix from a previous EUR0.22 per share cash bid, the company says. Cemex currently owns 62% of the company, a Cemex spokesman adds, and is currently seeking to acquire the 38% stake remaining. Company officials could not immediately provide additional details. Officials at Readymix could not be reached for further comment. Cemex’s offer values the company at approximately EUR27.4m ($36m), as estimated using the company’s 109.6m shares outstanding. On Monday, Readymix shares trading on the Irish Stock Exchange closed at EUR0.22 per share or an implied market cap of roughly EUR24m.
France’s Rexel Acquires Brazilian Electrical Supply Cos
French electrical equipment company Rexel has acquired two electrical material suppliers in Brazil in a bid to cement its presence in the country. Rexel acquired Delamano, a Sao Paulo-based company that posted EUR60m in sales last year, and Etil, also Sao-Paulo based and with EUR40m in sales in 2011. A Rexel spokesman declines to give a total figure for either acquisition, but says the company retained Ernst & Young Terco as a financial and tax advisor, and Pinheiro Neto Advogados as a legal advisor for the transactions. Delamano hired PwC as financial advisor as well as lawfirm Dessimoni & Blanco, while Etil used Grant Thornton for financial advisory and Nelson Wilians for legal counsel. Rexel estimates that the acquisitions turn it into a leading electrical material supplier in the Sao Paulo region.
Chile Sees Coke Bottler Consolidation
Chilean Coca-Cola bottler Embotelladora Andina has agreed to purchase its Coke bottling peer Embotelladoras Coca-Cola Polar in a share-financed transaction that continues the consolidation of soft drink bottlers in LatAm. Andina will issue 0.33269 A shares and 0.33269 B shares for each share of Polar, leaving Polar shareholders with a 19.68% stake in Andina. The Friday close of CLP1,955 ($4.09) for Andina’s A shares and CLP2,400 for B shares puts the company’s total market capitalization at roughly $3.46bn, meaning that the acquisition would be valued at approximately $680m. Prior to closing the deal, Andina and Polar will distribute $58.9m and $61.8m in a final 2011 dividend to their respective shareholders. JPMorgan advised Andina on the deal. Officials at Andina and Polar did not return calls requesting additional details. Based on Andina estimates, the combined company would boast $2.56m in pro-forma net sales, making it one of the largest bottlers in the region. Consolidation of bottlers has been a recent theme, especially in Mexico where the largest bottling companies are based. Over the past 6 months, Coca-Cola Femsa, the world’s largest Coca-Cola bottler, has acquired three independent bottlers in Mexico and more consolidation is expected in this space.
Trio Seeks Brazil Oil Block Farm-Out
ExxonMobil, along with Hess and Petrobras, is moving forward with the sale of a stake in an offshore block in the Santos Basin, located in the heart of the country’s famed pre-salt oil developments. The farm-out agreement is now moving beyond the data-room stage and partners are set to make a decision this month, an official at Hess confirms. The deal involves offering a new partner as much as a 25% interest in the exploration license of the BM-S-22 block, in exchange for financing a new well drilling. Currently Exxon operates the license and owns a 40% stake, with Hess (40%) and Petrobras (20%) holding the rest. The 25% stake on offer will be taken proportionately from each partner’s share, the official says. The terms have not been made public so far. An Exxon spokesman could not immediately provide additional details, and Petrobras officials could not be reached for additional comment. The BM-S-22 was auctioned by the Brazilian government in round three in 2001.
Mexico Blocks Televisa Deal with Iusacell
Mexican regulators have decided against approving multimedia company Televisa’s purchase of a 50% stake in wireless provider Iusacell, in a deal valued at $1.6bn. The companies reached an agreement in April 2011 as a way to give Televisa access to the mobile industry and strengthen Iusacell’s business. Commissioners at Mexico’s Comision Federal de Competencia, COFECO, voted 3 to 2 in favor of blocking the transaction, Televisa says. The company says it is contemplating “several legal alternatives” to encourage COFECO to reconsider its decision. Officials at Televisa declined to offer additional comments, while officials at Iusacell could not immediately be reached for more details. Televisa says it has invested $37.5m in Iuscacell equity, and another $1.565bn in Iusacell convertible debt paying 2% with a December 2015 conversion date. Iusacell, Mexico’s third largest cellular services company, has already begun using the invested funds. At the time of the transaction, Barclays estimated the deal came in at a pricey 21x EV/Ebitda multiple, using Iusacell’s 2009 Ebitda of $150m. The Televisa’s ADRs fell 3.3% on Thursday to $19.63 following the company’s confirmation of the regulatory move.
Atlantia, Bertin Strike Brazilian Motorway JV
Italy’s Atlantia, a toll road operating company, has created a joint venture with Brazil’s energy and infrastructure company Bertin SA in an effort to pool motorway concession projects. The agreement creates the second largest motorway operator in Sao Paulo with a concession life of 25 years. Under the deal, each partner will control a 50% stake in a venture with assets that should generate Ebitda of roughly BRL630m ($359m) with net debt of BRL1.625bn ($926m) in 2012, Atlantia says. Morgan Stanley advised Atlantia on the deal. Officials from Atlantia and Bertin, however, could not immediately be reached for additional comment. A new company comprising holdings from both Atlantia and Bertin will issue equity at a price of BRL236 per share. Atlantia will contribute the Triangulo do Sol, 442 km motorway concession in Sao Paulo state, while Bertin will do the same with its Colinas and Nacentes das Gerais concessions in Sao Paulo and Minas Gerais. The deal also includes an option for the new company to acquire a 95% stake in SPMR, the holder of the Rodoanel motorway concession and the creation of a second joint venture company structured along similar lines with a 50/50 split to handle a 50% stake in the Tiete concession in Sao Paulo.
Brazil’s Gafisa Wooed by Zell, GP
Brazilian homebuilder Gafisa is pondering a purchase proposal by billionaire real estate investor Sam Zell together with GP Investimentos. Gafisa officials admitted receiving a “preliminary asset purchase offer” and said they are analyzing the terms, but declined to offer additional details. The proposal would mean Zell’s repeat involvement with Gafisa after his investment company, Equity International, sold off its final 2.7% stake –
or 11.7m shares – in the real estate developer in August of 2011, worth about BRL84m ($54m) at the market price at the time. EI gradually reduced its stake in Gafisa starting in August 2010. Observers at the time attributed EI’s exit to Gafisa’s higher costs due to an investment in Brazilian builder Tenda, a player in the low-income segment of the housing market. Gafisa has 432.7m shares outstanding and a market capitalization of BRL2.32bn ($1.35bn). Its shares closed at BRL5.34 Thursday.
Canadian Pharma Gulps Brazilian Sports Drink Maker
Canadian pharmaceutical company Valeant has acquired Brazilian privately-held sports nutrition product and drink producer Probiotica Laboratorios in an all-cash deal valued at BRL150m ($86.7m). The acquisition cements Valeant’s foothold in Brazil, the one market, aside from Mexico, where Valeant maintains a presence in Latin America selling its generic pharmaceuticals. Valeant didn’t contract advisors for the deal, a spokeswoman says, and it is financing the buy with part of a new $500m tranche of its 2019 senior secured term loan B credit facility, announced earlier this week. Company officials estimate that the $86.7m that Valeant is paying for Probiotica represents an EV/Sales of 1.8x. Valeant previously acquired two Brazilian over-the-counter pharmaceutical companies in 2010 — one of which was Instituto Terapeutico Delta — a deal that included the purchase of a 165,000 square foot production plant.