US-based ketchup maker HJ Heinz’s announcement that it is acquiring an 80% stake in Brazilian peer Coniexpress for a rumored $700m is seen as a positive strategic move by equities analysts who cover the buyer. Coniexpress is the maker of the Quero brand of tomato sauces, ketchup, paste and condiments and holds the top 1 or 2 positions in numerous tomato-based categories in Brazil and the leading position in vegetables, according to Heinz. “I think Coniexpress is a strategic fit with Heinz’s core categories and brings the opportunity to expand Heinz’s brands in Brazil as well as introducing the Quero brand to international retailers like Walmart and Carrefour,” says a New York-based equities analyst. Regarding the price Heinz is said to be paying, another New York-based analyst says that if the rumors are correct, then Heinz should be paying about 18x Ebitda for the target. “Heinz is likely paying a premium given the expected growth in Brazil’s consumer demand,” the analyst says. Heinz, which was advised by JPMorgan, expects to close the transaction in the next few months.
Category: United States
Concha y Toro Buying US Winery
Chilean winemaker Vina Concha y Toro says it is acquiring California’s Fetzer Vineyards and related assets from Brown-Forman, the company that produces Jack Daniels whiskey, for $238m. A Concha y Toro spokesman tells LatinFinance that to finance the deal, the company has obtained a $125m bridge loan from Deutsche Bank maturing 6 months after the deal closes in April. He does not disclose pricing of the loan. The company will likely issue a bond of no more than $200m to refinance the loan and for working capital. “We still don’t know where we will issue the bond or in what currency,” he says. The buyer will also use cash on hand and existing credit lines, the spokesman adds. Celfin says the price paid implies a multiple of 1.5x sales and 7.6x Ebitda. “We see the deal as a substantial move toward internationalization for Concha y Toro, taking a significant step into the US market,” Celfin says, adding that Fetzer is the eighth largest player in the US wine market. BCI Estudios says the deal is in line with Concha y Toro’s internationalization plans by expanding its presence in key markets and reaffirms the positive perspectives for the company. The acquisition includes 6 wine brands, 429 hectares of owned and leased vineyards in Mendocino County, California, cellars with capacity for 36m liters, 6m liters of inventories, and a bottling plant. Deutsche Bank acted as Concha y Toro’s financial advisor while Rabo Securities and Rothschild advised Brown-Forman, according to the Concha y Toro spokesman.
CapGold Pushes Shareholders to Reject Timmins
US-based miner Capital Gold (CapGold) has sent a letter to shareholders asking them to vote for the merger with Gammon Gold and to reject the rival offer from Canada’s Timmins Gold. In October, Gammon, also based in Canada, offered to acquire CapGold for $288m or $4.57 per share. The offer came soon after Timmins had offered to acquire CapGold for $275m, an offer CapGold’s board immediately rejected. CapGold has turned Timmons away 4 times. In its letter to shareholders, CapGold says that Timmins “will need to raise an estimated $100m this year to complete the transaction and deliver on capital requirements which will be dilutive to stockholders.” It also says it believes that Timmins’ management does not have substantial operating experience and lacks sufficient depth to execute a transformational merger and to operate the combined companies. “Since there is no cash component to the Timmins offer, this may require that CapGold’s taxable US investors sell Timmins shares to cover tax liabilities arising out of a Timmins/CapGold merger,” it adds. As for Gammon’s offer, CapGold says it represents a 54% premium to the 20-day volume weighted average price on the Amex on the day before the offer was made. It also praises Gammon’s “strong management and operating track record” and “visibility as a mid-tier producer.” Gammon’s financial advisors are Dundee Securities and UBS, while CapGold’s is Comark Securities. Both companies have mining operations in Mexico.
MDU Sells Transmission Lines for $70m
MDU Resources has sold its interest in 3 electrical transmission lines in Brazil to 2 buyers for $70m. The US-based energy and transportation infrastructure company says the buyers, Brazil power companies Cemig and Celesc purchased 84.4% of its interest in the lines, while a third, Alupar, will acquire the rest over the next 4 years. The acquirers are existing partners in the transmission lines.
Stefanini Targets US Buy
Brazil’s Stefanini IT Solutions has launched a tender offer for all outstanding shares of common stock in TechTeam. Stefanini made an $8.35 per share tender offer, net of cash, for the US IT outsourcing and BPO company. The per share offer implies an aggregate deal value of $93.44m. TechTeam does not return calls for comment. The Brazilian IT solutions provider’s offer will expire December 10.
Bimbo Consumes Sara Lee US
Grupo Bimbo will acquire the US bakery assets of Sara Lee for $959m. The deal price is less than the $1.1bn-$1.5bn bankers and analysts had forecast for the unit. However, it does not include Sara Lee’s Spanish or Australian assets, which several analysts had thought would be particularly attractive to Bimbo. Sara Lee owns the Bimbo brand in Spain, for example, which the original Bimbo founding family had sold years earlier and was eventually acquired by Sara Lee. The deal value implies an 8.9x Ebitda multiple on LTM adjusted Ebitda of $108m, above the 7x-8x Ebitda multiple that had been expected, according to analyst reports. Bimbo says it has identified $150m-$200m in potential synergies through operational overlap, which would bring the synergized multiple down to 3.7x EBITDA. Sara Lee refers questions to Bimbo, which does not return calls for comment. BAML is advising Sara Lee, with Bimbo retaining Atlas Advisors. The bank market is getting ready for an associated financing, which would have to launch soon to get done this year. The late 2008 acquisition of Weston Foods’ Eastern US distribution assets by Bimbo included a dual tranche, dual currency $1.7 billion syndicated loan via Bank of America, BBVA, Citi, ING, HSBC and Santander.
IMG and EBX JV in Brazil
IMG Worldwide, a US-based sports, entertainment and media business, and EBX Group will form a 50/50 JV to pursue sports and entertainment opportunities in Brazil. The new company, to be called IMGX, will consider a broad range of investments. They may include golf and tennis tournaments, volleyball and surfing leagues, stadiums, and sports marketing businesses geared toward the upcoming World Cup and Olympic games, according to an IMG spokesman. Eike Batista, founder and chairman of EBX, a Brazilian infrastructure and natural resource developer, is also investing in the Rio marina, and IMGX may seek to leverage developments there with additional sports and entertainment investments. No advisors were retained on the deal, and IMG did not respond to questions regarding capitalization plans for the new company.
InBev BRL Debut Fizzes
Anheuser-Busch InBev, which holds the LatAm assets of AmBev, has sold BRL750m in global real-denominated bonds. The international brewer’s Baa2/BBB+ 2015 bond priced at par with a 9.750% coupon to yield at the tight end of 9.875% area guidance, revised from initial 10.000%-10.125%. Demand topped BRL2bn, bankers on the deal say, including EM-focused and high-grade investors with a wide geographic distribution. Barclays, Deutsche and Itau managed the deal. It follows a Brazil sovereign BRL1bn 2028 retap and a BRL575m 2020 issuance by Morgan Stanley, both done last month to fuel surging investor demand for local currency exposure. Bankers, already pitching sovereigns and LatAm corporates with global local currency structures, expect more issuer candidates to emerge among global companies with sizeable LatAm assets.
Travelers Buys Brazil Insurance
Travelers, the US property and casualty insurer, will acquire a 43% stake in J. Malucelli Participacoes from parent company Parana Banco for $370m. Parana will continue to hold 57% of the surety insurance subsidiary, though Travelers has the option to increase its stake to 49.9% within 18 months for the same price it paid for its initial stake, indexed to CDI. The deal implies a pre-money valuation of BRL925m for the unit, according to a spokesman. Greenhill advised Travelers, while Malucelli used BTG Pactual, the spokesman adds. According to the company, Travelers’ investment in newly issued shares will significantly increase J. Malucelli’s capital level, allowing it to fund further expansion. Management at Malucelli will stay in place, though Travelers will take several board seats, according to an investor conference call.
Debt Payments Bring Univision to Table
Univision’s need to extend its debt load likely played role in bringing it to the negotiating table with Televisa, says Enrique Senior, MD at Allen & Co, which advised the latter on its buy. Univision has approximately $8bn in debt coming due in 2014 from its original sale in 2006, with about another $2bn maturing in 2015. Meanwhile, its programming license agreement with Televisa, which provides 90% of Univision’s prime time content, expires in 2017. “I don’t think any bondholder would have extended past 2017 without those agreements in place,” Senior says. Univision also commands sole US distribution rights to Televisa content. With a more attractive fee structure in place, analysts estimate that Televisa can expect to monetize significant portions of its media library in the growing US market. “The US marketplace is of paramount importance to Televisa’s strategy of expanding our reach beyond Mexico and maintaining our leadership as the leading media company in the Spanish-speaking world,” says Alfonso de Angoitia, EVP at Televisa. “Accordingly, we have been working diligently to realize the value of our content in the US. We are confident that this investment in Univision achieves our objectives while positively improving our financial results from day.”