Costco is acquiring Controladora Comercial Mexicana’s 50% stake in their Costco de Mexico joint venture, for MXP10.65bn ($767m), the companies say. As part of the transaction, Costco Mexico is paying out a MXP4.77bn dividend, 50% of which goes to Costco to help it fund the purchase of CCM’s stake, along with cash on hand and investment balances. CCM will receive the other 50% of the dividend, and use it and the proceeds from the sale to pay down debt. “We think it is a good use of our cash, and it happened now,” Costco CFO Richard Galanti says on a conference call when asked about the motivation and timing of the deal. “Costco operates a very profitable business in Mexico and we think this transaction was something the company has wanted to do for some time,” Credit Suisse says in a report, calling the deal “positive for both companies.” Costco Mexico will now be able to open stores at a faster pace, changing the competitive dynamics of the sector, the bank says, noting that CCM, too, will have a better financial position to compete in its portion of the sector. The deal should be accretive for Costco in 2013, CS says. CCM, which had to restructure its debt in 2010, should see its leverage plummet from 4.5x net debt/Ebitda to 1.4x after the deal is complete. CCM chairman Guillermo Gonzalez Nova and CEO Carlos Gonzalez Zabalegui will remain on Costco Mexico’s board of directors, and Jaime Gonzalez Solana stays on as Costco Mexico CEO.
Category: United States
US Manufacturer Expands into Colombia
US-based General Cable has agreed to pay $45m for a 60% stake in Procables, a Colombian wire and cable products manufacturer, it says. Procables, which reported $120m in revenue in 2011, will remain 40% held by the local, privately-held Sredni Group, which General Cable sites as having over half a century of market experience in the region and sector. The deal value is inclusive of net working capital and debt adjustments, and is expected to close the second half of 2012, pending regulatory approval.
GP Slices off Steakhouse
On a day that saw a number of M&A deals in the region, GP Investments has agreed to sell the Fogo de Chao Churrascaria Holdings restaurant unit to US private equity firm Thomas H. Lee Partners for $400m, it says. The Brazilian private equity firm says the price represents 3.4x what it spent on a 35% stake in 2006 and the acquisition of the remainder last year. The investment has returned 25% overall, GP says. The sale – an example of the increasing trend of PE to PE exits in the region, which managers see as a sign of maturity – is expected to close in Q3. The Brazilian steakhouse operator had 9 locations in 2006, and now operates 25, in Brazil and the United States.
US Industrials Player Moves into Peru
US-based equipment manufacturer Colfax has acquired 91% of Peruvian welding products supplier Soldex from Inversiones Breca, it says. The sale values Soldex at $235m, including the assumption of debt. Colfax, a fluid-handling systems specialist with a welding products business active in several South American countries, is using its own cash for the deal. Soldex has operations in Peru and Colombia. BBVA and Miranda & Amado advised Colfax on the deal, while MBA Lazard and Rebaza, Alcazar, de las Casas advised Breca.
Batista Continues Courting Strategics
Brazil’s EBX continues to generate interest from foreign strategic investors, with a $300m investment from GE, and more is expected on the way. The US-based conglomerate is purchasing a 0.8% stake in Eike Batista’s Centennial Asset Brazilian Equity holding vehicle, the companies say, and is paying a similar price level to that seen in a $2bn sale of 5.63% to Abu Dhabi sovereign wealth fund Mubadala Development Company in April. Bankers say that this type of private, pre-IPO investment is preferable for large strategic investors looking at growth and commodity plays in LatAm, and to the companies themselves during periods of uncertainty in the public equity markets. Sovereign wealth funds and other strategic buyers are being increasingly pitched with these opportunities. “This type of long-term minority real money is healthy [for the region]. The trend is initially financials and natural resources, but it should be followed by other sectors,” says a New York-based LatAm investment banker. He adds that infrastructure should receive much more investment, noting that it is already some of EBX’s makeup, and that some investors, such as Canadian pensions, have been making infrastructure plays for a long time. EBX plans to use proceeds to further enhance its capital structure and finance its pipeline of future investments. The companies claim a previous relationship, which includes GE supplying equipment to Batista companies’ projects. Neither side responded to a request for comment on its advisors. The price paid is proportionally similar to that paid by Mubadala, which at the time was seen implying a $35.5bn valuation for EBX and around a 40% premium to market value, according to some analysts, though measuring them is difficult given that only 5 of the 11 Batista units are public. Batista has publicly announced plans to list shares of gold miner AUX and real estate unit REX, and EBX itself could eventually be floated. Shares of Colombian coal miner CCX are to begin trad
US, Colombia Look to Improve ECA Relationship
The US Ex-Im Bank and Colombian state-owned development bank Bancoldex have signed an MOU to work together to facilitate trade between the 2 countries, US Ex-Im says. The pair will look to boost business in sectors including infrastructure, environmental projects, medical equipment and transportation, by expanding use of Ex-Im Bank financing by Colombian buyers of US goods and services.
Tenaris Unit Loan Price Emerges
Maverick Tube Corporation, a part of the Techint Tenaris group, launched its $350m loan at a bank meeting in New York Tuesday. The 3-year amortizing loan pays a spread of Libor+225bp. Credit Agricole is admin agent and joint bookrunner and Citibank, JPMorgan, Bank of Tokyo-Mitsubishi and Itau are joint bookrunners, with Santander and Standard Chartered as senior MLAs. Maverick was acquired by Tenaris in 2006.
Genomma Gives Up on Prestige
Genomma Lab has decided not to continue with its attempt to buy US healthcare and cleaning brands company Prestige Brands (PBH), it says. Prestige has told the Mexican pharmaceuticals company it would need a “significant increase” to the $16.60 per share, or $834m total, unsolicited offer Genomma originally made in February, Genomma says. Prestige had previously indicated the offer was too low, and also adopted a shareholder rights plan, better known as a ‘poison pill’, in an attempt to block the move. The offer represented an implied 9.5x Ebitda multiple in a best-case scenario, and likely undervalued Prestige’s shares, Janney Capital Markets said at the time. Genomma notes it had obtained a commitment for up to $2.2bn in financing for the deal. PBH owns more than 50 brands, including Comet, Compound W, Efferdent, Dramamine, and Spic And Span.
Tenaris Unit Plans Loan
Maverick Tube Corporation, a part of the Techint Tenaris group, is scheduled to hold a bank meeting in New York May 8, as it seeks to raise a 3-year, $350m senior secured term loan. Credit Agricole is admin agent and joint bookrunner and Citibank, JPMorgan, Bank of Tokyo-Mitsubishi and Itau are joint bookrunners. The spread to Libor has not been disclosed. Maverick was acquired by Tenaris in 2006.
US Fuel Payment Processor Enters Brazil
FleetCor Technologies has agreed to acquire Brazil’s CTF Technologies for $180m, it says. CTF provides fuel payment processing services for road fleets, ships, mining equipment, and railroads, and claims Bradesco, Itau, Petrobras and Ipiranga as clients. CTF earns revenue primarily from a recurring transaction fee paid by the oil companies who purchase the CTF system for their fleet customers under multiyear contracts. The deal marks an entrance into Brazil for FleetCor, which already operates in Mexico. Georgia-based FleetCor provides fuel and specialized payment products with a focus on the oil industry.