Category: M&A

American Banknote (Abnote), a Brazilian printer of banking and financial documents, has agreed to pay BRL193.2m for the Brazilian assets of Swedish media company Bonnier. The acquisition will include BRL165m in cash and 1.5 million shares at BRL18.80 each to Interprint shareholders. The transaction includes Bonnier’s Interprint, Tecnoformas Industria Grafica and a 50% stake in Incard do Brasil. Abnote said that it will issue another 1.25m shares to Interprint’s shareholders in the future, depending on the company’s performance. It plans to finance the acquisition by issuing BRL165m in debentures.

Telemar and Brasil Telecom investors plan to swap their stakes in each other in a deal that could facilitate a merger of the two phone companies. Zain Participacoes and Argolis Participacoes, holding companies with indirect stakes in both, plan to swap assets so each focuses its investment in one company, the companies say in regulatory filings. Zain, which indirectly controls Brasil Telecom, will spin off its 16% stake in Argolis and transfer the shares to Argolis, which indirectly controls Telemar. Argolis will cancel shares it owns in Zain and issue new shares that will be given to Zain shareholders. The companies say the motivation for the transactions is to increase transparency and simplify the shareholder structures. Telemar shareholders said earlier this month they were in talks to buy Brasil Telecom.

Brazil’s Vale confirmed Monday that it is in talks with Xstrata about a potential acquisition of the London-listed Swiss company. Local press in Brazil reports the company was considering a purchase price of $90bn or more, which would make this deal the largest and boldest cross-border acquisition ever pondered by a LatAm company. One paper suggests Vale is considering issuing $30bn in preferred shares, leaving $60bn to be funded with cash and additional debt. In 2006, Vale raised $18bn in debt to pay for its acquisition of Inco with relative ease and paid a good part of it off within several months. At the time, it was by far the largest LatAm acquisition financing. A much bigger transaction in a significantly trickier LatAm loan market loan looks like a very tall order. Amid global credit turmoil which only gets worse, spreads have widened out considerably and lenders have backed away from new deals. And the Inco deal was swiftly taken out in local and cross-border bond markets, both of which are much less receptive now. Nonetheless, banks including Credit Suisse, Santander, BNP, HSBC and Citi are rumored to be looking at putting a package together. “I think something of this size is very possible,” says the head of debt markets at a Vale relationship bank. “This is far above and beyond a Brazil or LatAm credit,” he adds. Following the announcement Monday, Vale’s preferred shares fell 11% on the Bovespa amid a 6.6% fall in the overall Brazil market.

Brazil’s Usiminas is negotiating, on an exclusive basis, the acquisition of Mineracao J. Mendes, Somisa Siderurgica Oeste de Minas Ltda, and Global Mineracao, according to rating agencies. The three targets are engaged in iron ore mining and located in the state of Minas Gerais. “We expect Usiminas to maintain a very conservative financial strategy and credit measures for the rating category, despite the acquisitions,” says S&P. “We believe there are risks associated with executing these investments, but the company’s experienced team and positive investment track record mitigate these risks.” According to Moody’s, an acquisition would further improve Usiminas’ business profile by creating a natural hedge for its iron ore costs and make the company virtually self-sufficient in iron ore. Usiminas reported consolidated net revenues of BRL13.6bn in the 12 months ended September 30 2007, says Moody’s.

Brazil’s Usiminas is negotiating, on an exclusive basis, the acquisition of Mineracao J. Mendes, Somisa Siderurgica Oeste de Minas Ltda, and Global Mineracao, according to rating agencies. The three targets are engaged in iron ore mining and located in the state of Minas Gerais. “We expect Usiminas to maintain a very conservative financial strategy and credit measures for the rating category, despite the acquisitions,” says S&P. “We believe there are risks associated with executing these investments, but the company’s experienced team and positive investment track record mitigate these risks.” According to Moody’s, an acquisition would further improve Usiminas’ business profile by creating a natural hedge for its iron ore costs and make the company virtually self-sufficient in iron ore. Usiminas reported consolidated net revenues of BRL13.6bn in the 12 months ended September 30 2007, says Moody’s.

Fitch has upgraded the local ratings of Banco del Pais in Honduras to A+ from BBB minus, following the acquisition by Guatemala’s Banco Industrial. “The upgrade in Banpais’ ratings reflects the potential support that it will likely receive, if it were required, from its newly formed parent,” the agency says. The BB ratings of Industrial remain unchanged, as the acquisition does not directly affect its financial condition.

Brazil’s BNDES development bank has approved a BRL314.1m loan for rubber producer Vulcabras. The loan will fund the acquisition of a controlling stake in shoe company Calcados Azaleia. Interest on the eight-year loan is 4.02bp over TJLP.

LatAm targeted M&A volume totaled $109.6bn in 2007, up 15% from 2006, according to Dealogic. Acquirers outside LatAm accounted for 41% of the volume, compared to 48% in 2006. Citi led by volume in the region, for both announced ($32.4bn) and completed deals ($43.8bn). EM market volume was up 43% at $909.1bn, while global volume rose 23% to $4.83trn. LatAm bankers expect slightly less M&A business this year.

Basic Energy Group’s acquisition of Jamaica Energy Partners (JEP), owner of two power barges in Jamaica, for $92.5m from Conduit was financed using equity and debt, according to the buyer. The debt was provided by Citi and BNP Paribas advised the seller, while Basic used no advisor. In addition, Basic Energy assumed JEP’s debt with the IFC. JEP has been funded since inception with long-term financing from the IFC. It operates under a long-term contract with Jamaica Public Service, the privately-held utility. Basic Energy is a power company with activities in the Caribbean and Latin America. It recently took a controlling stake in Pedregal Power in Panama and is developing a number of renewable energy projects, including a wind farm in the Caribbean.