Cemig has raised its stake in Light, which has distribution assets mainly in Rio state, via share purchase agreements worth approximately BRL1.6bn. The sellers are AGC, the concession holding company of the Andrade Gutierrez group, and PCP, the controlling shareholder of Equatorial, both of which currently have a stake in RME, the holding company controlling Light. The acquisition is at approximately BRL29.54 per share and done via an SPC and equity investment fund, in which Cemig will have a minority stake. On completion of the deals, the SPC will hold up to 26.06% of Light, while Cemig and Luce will retain its original stake, equivalent to 13.03% each in direct stockholdings. Based on market estimates, says Cemig, the enterprise value/Ebitda equals 7.22 in 2009 and 6.36 in 2010. It adds that price per share is on par with previous transactions closed in the Brazilian electricity market. The real annual rate of return to the shareholders is of 11.0%, in addition to further gains derived from future improvements in operational efficiency, says the buyer. JPMorgan advised the target, according to Dealogic. The deal still requires regulatory approval. Prior to the announcement of the acquisition, Cemig had a 13.03% indirect participation of Light’s capital. Cemig chairman Sergio Barroso says the deal continues a strategy of growing beyond the state of Minas Gerais.
Category: Brazil
Bunge Buys Into Brazil Sugar
Bunge, the global agribusiness and food company, is buying a Brazilian sugar mill and pursuing other similar assets in a deal that could amount to $1.5bn in size. It started late December by agreeing to purchase for $896m Usina Moema Participacoes (Moema Par), a holding company with a sugarcane mill in Brazil and stakes in 5 others. The transaction will be structured as an exchange, with shareholders in Moema Par offered 7.3m common units of Bunge Limited, including roughly $36m in working capital. Based on the December 23 closing price of Bunge, the value of the transaction is approximately $896m, including approximately $480m net debt and excluding working capital, says Bunge. Itau advised the target, while Credit Suisse helped the buyer. “In the coming weeks, Bunge may enter into agreements to secure some or all of the remaining interests in the mills that constitute the Moema Group. These transactions would be on economic terms consistent with the Moema Par transaction,” says the buyer. The buyer estimates a total transaction value of $1.48bn, including approximately $710m in net debt and excluding working capital. Together, the 6 mills (Moema Group) have annual crushing capacity of 15.4m metric tons, says Bunge, which will have a 60% share of total capacity, representing Moema Par’s wholly owned mill and its interests in 4 of the 5 other mills. Bunge says that if, in addition to completing the Moema Par transaction, Bunge secures 100% of the remaining outstanding interests in Moema Group mills, shareholders in Moema Par and other stakeholders would get approximately 13.4m common shares in Bunge. This includes approximately $60m for working capital. Bunge expects all transactions to be accretive to earnings per share in the first 12 months. “For sugar and bioenergy, Brazil is an ideal location in which to invest,” says Alberto Weisser, chairman and CEO of Bunge. “It has a fast-growing domestic market for ethanol and, because it boasts the world’s lowest-cost pro
Itau Reported Mulling UK Stakes
Itau Unibanco is considering taking a stake in one of the UK’s troubled banks, according to a UK newspaper. Brazil’s biggest bank is thinking of buying shares in RBS and Lloyds sold by the British government. “We’re looking. Of course we’re looking,” says Pedro Malan, chairman of Itau’s international advisory board, according to the Sunday Times. The paper also quotes the former finance minister saying that the bank is in no hurry to purchase in the UK. It is also examining deals in a number of other countries, including the US, says the report in yesterday’s edition.
PEOPLE MOVES: BTG on Hiring Spree
Brazil’s BTG Pactual has hired a group of sales people to beef up the LatAm equity effort, as well as a research analyst to lead a push into Andean markets. They include Santander’s former US-based LatAm equity sales head Frederico Monnerat and ex-Itaú LatAm equity research sales official Renato Lobo.
LatAm Equity: Price Isn’t Right
There is much to look forward to in LatAm equity. On the new issue side, most of the action will be concentrated in Brazil, which had an extraordinary year given the dearth elsewhere in emerging markets.
M&A: Vivendi Bags GVT
France’s Vivendi has acquired a 57% stake in Brazil’s GVT through a combination of private negotiations with the telecom’s controlling shareholders and open market purchases, valuing the target at 7.17 billion reais.
BEST SOVEREIGN ISSUER
Brazil brought the first sovereign bond of 2009 – on the same day as Colombia – though credit for reopening emerging markets goes to Mexico’s daring 2019 three weeks before in mid-December.
BEST PRIVATE EQUITY DEAL
In May 2009, private equity shop Advent International, which has more than $6 billion in assets under management, snapped up about 30% of Brazil securities clearinghouse Cetip-Balcão Organizado de Ativos e Derivativos for 360 million reais with funds from its LatAm PE fund, which is capitalized at $1.3 billion.
BEST CROSS-BORDER M&A DEAL
Brazil’s Companhia Siderúrgica Nacional (CSN) sold in October 2008 a 40% stake of iron ore unit Namisa to a consortium of Japanese and Korean companies when iron ore prices were sliding, as were practically all other commodities amid the global financial slump.
Brazil Investors Switch to Corporates
As the juice is sucked out of government credit, Brazilian fixed income investors are pushing into the private sector. Secondary liquidity, meanwhile, remains elusive.