Category: M&A

BR Malls, the shopping mall acquisition and operating company, has received the go-ahead from the Brazilian securities commission or CVM to issue its debut local bond, worth BRL300m ($161m). Two tranches will have maturities of 2014 and 2016, and will pay 150bp over the yield of the 2015 NTN-B government note. UBS in coordinating. Earlier this year, the company raised BRL657m from its IPO on the Bovespa.

ING has high hopes for the development of its LatAm pensions business following the Santander acquisition. “ING expects to double its pension fund AUM [assets under management] in the region between 2008 and 2011,” says the bank. ING says its combined LatAm pension business (excluding Argentina) with Santander’s had, in aggregate, €35.5bn of AUM at the end of 2006, says ING. The Dutch bank already claims a presence in Chile, Mexico and Peru. “This transaction will extend ING’s pension expertise to two new countries, namely Colombia and Uruguay, both of which are showing a steady GDP growth and an increasing demand for wealth management products,” says ING.

Proskauer Rose, the international law firm, has opened an office in São Paulo for debt, equity, M&A and bank finance services. The effort is headed by Antonio Piccirillo, partner in the firm’s corporate department, with the assistance of Carlos Martinez, corporate partner and head of the firm’s Latin America practice. “Our work in Latin America has continued to increase, making a physical presence in the region of clear strategic significance for the firm and our clients,” says Allen I. Fagin, chairman of Proskauer. He adds that Latin America is “ripe with potential.”

Mexico anti-trust commission, CFC, has laid down conditions for the acquisition by the country’s largest broadcaster, Televisa, of a 49% stake in Mexico’s second-largest cable company, Cablemás. Last year the broadcaster offered to pay $258m for the stake in Cablemás. The Commission has stipulated that Televisa must offer its free broadcast content to other pay-TV operators in the country and carry on its satellite system any signals with 30% or more national coverage. Televisa can appeal against the decision within 30 days, said the CFC.

Fitch has upgraded America Movil to A minus from BBB+, including approximately $4.5bn in senior unsecured debt. The agency praises the telecom’s strong subscriber growth, revenues and cash flow and the expectation that management will maintain a relatively conservative credit profile over the long term. “Potential acquisition opportunities for America Movil in Latin America are currently limited,” says Fitch. “While further acquisitions can not be ruled out, Fitch believes that if total debt to EBITDA were to approach 1.5x through debt-financed acquisitions the current rating could be maintained if America Movil demonstrated a clear path for leverage to return in the near term to the historical, approximate 1x level,” it adds. According to the agency, the firm’s cash balances as of March 31 was over $1.9bn and upcoming maturities for the next three years are about $1.9bn.

JPMorgan and Citi clinched the top two spots for M&A advisory in the first half of the year in LatAm, advising on $15.87bn and $12.79bn worth of takeovers and mergers, according to Dealogic. JPMorgan advised on 26 deals, taking 31.3% of the market, while Citi had 22 deals representing 25.18%. Calyon came in third, with five deals, worth $7.16bn, followed closely by Morgan Stanley, also with five deals and $7.05bn. ABN AMRO ranks fifth with 13 deals worth $5.95bn.

The number of M&A deals in Latin America surged 34% in the first half of the year to 578, compared to 430 in the same period last year, according to Dealogic. However, the absence of large deals, worth over $5bn, in the first half resulted in a 25% drop in overall dollar volumes to $42.7bn, from the $57.7bn registered in the first half of 2006, when the acquisitions of Brazilian telecoms Telemar Norte Leste and TIM were printed, together yielding over $13bn. Also, average deal size fell to $150m, down 38% from $243m in the year ago period, indicating a pickup in mid-cap activity. Brazil was once again the region’s hotspot for M&A, with $15.8bn via 208 deals so far this year, compared to 135 a year ago. “We’re seeing a pickup in the number and frequency of deals between $500m and $2bn,” Luiz Muniz, head of Rothschild Brazil, tells LatinFinance. “M&A activity is benefiting from all of the IPO activity and the liquidity available from local banks in Brazil,” he adds. The top deals in the first half included Eni’s $4.8bn acquisition of oil and gas assets in the gulf of Mexico, SACI Falabella’s $4.6bn purchase of Distribuicion y Servicio D&S, in Chile, and Ternium’s $3.2bn acquisition of Grupo IMSA.

The loan financing for Ternium’s acquisition of IMSA, the Mexican steel products maker, is headed to its final stages, and a complete lineup of participants is expected by the end of next week. Most of the financing is being raised by the target, with less than 10% being raised by Ternium. Ternium will borrow a maximum of $340m via a 5-year term loan at Libor plus 100bp, though that amount is likely to decrease and go undrawn. Hylsa and IMSA will together borrow $3.749bn across two tranches. A 4.5-year amortizing tranche will pay Libor plus 65bp if the leverage ratio stays between 3.00X-3.50X, and Libor plus 75bp if it moves up to 3.75X. Hylsa will take out $1.97bn and IMSA 777.5bn for the amortizer. A second, 5-year bullet tranche will pay Libor plus 77.5bp or Libor plus 80bp using the same leverage grid. As in the case of the amortizer, Hylsa will borrow $1.97bn and IMSA 777.5bn for the bullet tranche, according to bankers on the deal. Lead banks Citi and Calyon have lined up seven MLAs: ABN AMRO, BBVA, BNP, Unicredit, Deutsche Bank, JPMorgan, and San Paolo Intesa. General syndication is underway and books are expected to close by the end of next week.

Mexican autoparts maker Nemak is considering raising as much as $500m in the bank market to refinance bridge loans it took out for a series of cross border acquisitions, according to bankers away from the deal. In May the company agreed to buy Castech from Mexico’s Grupo Industrial Saltillo for $136m and in March it said it would pay $414 plus some equity for TK Aluminum. BBVA and Citi have been tapped to lead.