Chile’s largest retail company Cencosud has agreed to acquire Brazilian supermarket chain Prezunic for R$875m ($494.4m), after days of rumors regarding the transaction. Considering working capital and debt adjustments of R$189m under the terms of the deal, the net payment for the company assets comes to R$685m, Cencosud said in a statement. Company officials declined to comment further on valuation details or which institutions advised on the transaction. Chile’s retail chain has made no secret of its expansion plans which have put pressure on its cash flows and increased its leverage versus its peers. Barclays Capital estimates, the company now has a debt-to-Ebitda ratio in the low 3x area. As a result of the latest transaction, Cencosud establishes a presence in Rio de Janeiro, where Prezunic is the third largest supermarket chain.
Category: Chile
Ferrovial Sells 40% In Chilean Toll Operator
Spain’s transportation infrastructure investor Ferrovial sold its remaining 40% stake in Intervial Chile, a toll road operator, to Colombia’s Interconexion Electrica (ISA) in a deal valued at EUR160m (US$216m). The transaction is part of a purchase option that ISA had the right to exercise as agreed in Sept. 2010 when it purchased the initial 60% stake from Ferrovial. Intervial Chile currently operates 5 different toll road concessions in the Andean country. ISA officials said no advisors were involved in this option exercise agreement and noted that the final value of the deal could vary by the time of the closing, expected over the next 90 days. Colombia’s ISA has operations in Central America as well as Panama, Chile, Colombia, Brazil, Bolivia and Peru.
Chile Holds Rates
Chile’s central bank chose to maintain the benchmark policy rate at 5.25%, in line with market expectations. In a statement, the bank pointed to slow growth in international economies and high financial risks in Europe. It noted that ongoing problems around the world could affect growth and inflation in Chile, along with the orientation of its monetary policy.
Chilean Court Backs Codelco, Freezes Anglo Stake
A Chilean court on Tuesday issued an order to prevent global miner Anglo American from selling its remaining 75.5% stake in the Anglo Sur copper mining complex, following a controversial sale to Japan’s Mitsubishi. Anglo struck a $5.39bn deal last week to sell a 24.5% stake to Mitsubishi in an attempt to sidestep an option to sell a full 49% share to state-owned Codelco at a cheaper price in January 2012. The sale to Mitsubishi represents a multiple of 18.1x 2010 Ebitda, far higher than the 10.2x 2010 Ebitda multiple Anglo would realize if it sold a 49% stake to Codeco for $6bn, as stipulated in the option. Codelco filed an injunction following last week’s deal with Mitsubishi, “to stop Anglo’s threat of selling additional shares”, says a Codelco spokesman. Officials at Anglo American could not be immediately reached for comment. Codelco doesn’t question the sale to Mitsubishi, the spokesman adds, but it still expects Anglo to sell it a 49% stake as stipulated. According to the option, Codelco can buy a 49% stake as long as Anglo still holds a 100% in the venture, otherwise it must buy less. Codelco argues, however, that Anglo had already received notice of its intentions to buy the 49% stake and as such it must still sell that piece of the business next year.
Chile Set for Rates Decision
Chile’s central bank is scheduled to announce its benchmark interest rate policy decision late today. The market largely expects the country’s monetary authorities to hold rates at 5.25%. “The GDP proxy Imacec [economic activity index] remained solid in September and inflation surprised to the upside in October with potential contamination on inflation expectations,” RBS says in a report forecasting a hold.
Mitsubishi Upends Codelco’s Anglo Sur Ambitions
Anglo American has agreed to sell 24.5% of the Anglo Sur copper mining complex in Chile to Mitsubishi in a surprise $5.39bn deal. The move lands a blow to Chilean state copper company Codelco’s ambitions to secure a 49% stake in the venture. Mitsubishi swooped in on the chance to pay $5.39bn for only 24.5%, or a multiple of 18.1x 2010 Ebitda. Mitsubishi’s implied enterprise valuation for the entire project was $22.9bn. Codelco can now only buy a smaller, 24.5% piece. “The valuation is compelling,” an Anglo American spokesman says when asked to comment on the sale, which comes just ahead of the government’s option exercise date. Goldman Sachs and UBS advised Anglo American on the deal, according to company officials. Codelco sought to exercise an option in January 2012 to buy 49% of Anglo Sur paying an estimated $6bn, or 10.2x 2010 Ebitda. The option made this possible as long as Anglo American held 100% of the venture at the time, Anglo American officials said. Codelco officials could not be reached for comment, but in a statement the company said the transaction “doesn’t affect Codelco’s rights over 49% of the shares in Anglo Sur” and that it would “pursue all necessary actions” to defend its rights. Mitsubishi has been a long-time investor in Chilean copper and currently holds a 2.5% stake in Chile’s Escondida open pit mine.
Mitsubishi Nabs Chilean Salmon Play
Japan’s Mitsubishi has agreed to pay $125m for Chile’s Salmones Humboldt, as it expands its salmon fishing business in South America. The deal is valued at roughly JPY10bn ($125m), Mitsubishi says, and was executed through its subsidiary Southern Cross Seafoods (SCS). Mitsubishi officials could not be reached for comment, and Salmones Humboldt did not return calls seeking additional information. Salmones Humboldt is based in the southern city of Puerto Montt where Mitsubishi’s SCS unit is also located. The acquired company has a processing and farming capacity of 20,000 metric tons a year, according to Mitsubishi estimates. SCS currently holds a 10,000 metric ton-a-year capacity. The move is the latest in the consolidation of fishing sectors in Chile and Peru in recent years.
CFR Continues Global Spree
Chile’s CFR Pharmaceuticals has agreed to buy 50.79% of Canada’s Uman Pharma for CAD26m ($26m), its second small international buy in less than a week. The pharmaceutical company continues to spend a $370m IPO war chest after buying a 41.88% position in Vietnam’s Domesco for $14m. CFR is making both a LatAm and EM-wide expansion push, to capitalize on rising incomes and economic growth across the globe. Prior to the recent purchases, it was present in 19 countries in Asia, the Americas and Europe, either through direct operations or joint ventures.
Morgan Stanley Unloads 50% Saesa Stake
Morgan Stanley sold its 50% stake in Chilean utility group Inversiones Saesa to Alberta Investment Management (AIMCo), in a deal valued at more than $550m, according to people familiar with the transaction. As priced, the deal came with an Ebitda multiple in excess of 16x, higher than traditional utility deals in the region, a person with knowledge of the transaction valuation pointed out. In the deal, the investment bank sold off its Pelicano Holdings unit, which held the 50% stake in Saesa. Morgan Stanley was advised by Citigroup, while HSBC advised AIMCo. Saesa’s remaining stake is now controlled by Canada’s Ontario Teacher’s Pension Plan Board (OTPP). Saesa was originally acquired by both partners, Morgan Stanley and OTPP, for $870m in 2008.
BBVA Chile Plans MXP Bond
BBVA Chile is looking to follow BCI and Banco de Chile to Mexico’s domestic debt market. The bank is planning to issue up to MXN2bn ($149.1m) in bonds with a tenor of up to three years and a variable interest rate, according to rating agencies. The deal is rated AAA on a national scale. Banco de Chile is also expected to sell an up to MXP2.5bn 3-year bond, marking its debut in this market. Banamex and JPMorgan are managing that sale.