Cielo has agreed to buy US payment processor Merchant e-Solutions (MeS) for $670m, it says. The Brazilian credit card payment processor was particularly drawn to MeS’s payment platform technology and its potential use in Brazil, rather than to the international expansion. The move offers Cielo diversification and better defense against increasing competition in Brazil’s credit card payment sector, which will remain its major focus. The deal was seen at a multiple of 11x Ebitda, according to remarks from Cielo’s CEO cited in local news and wire reports, and Cielo does not expect to put money into growing MeS in the US. MeS processes more than $14bn per year in transactions, with more than 250 financial institution clients, taking in $124m in revenue for the 12-month period through May 31. The transaction is being financed through Cielo’s own cash generation and prepayment of receivables from issuers, according to a spokesman. Goldman Sachs advised Cielo, and JPMorgan advised MeS.
Category: United States
Petrobras Takes All of Texas Refinery
Petrobras has agreed to pay $820.5m to acquire the 50% that it doesn’t already own in Pasadena Refining Systems, it says, ending a prolonged legal dispute with former partner Transcor Astra over the US asset. In the deal, Petrobras pays Belgium’s Astra, controller of Astra Oil Trading, the value of a put option set in 2009. The option was the subject of a lengthy arbitration process between the two parties, which has now been resolved with the agreement. Petrobras acquired its original 50% stake in the Pasadena, Texas-based refinery in 2006 for $360m.
Modelo Sells High
Anheuser-Busch InBev has agreed to buy the remaining 50% of Mexico’s Grupo Modelo, it says, for a $20.1bn price at the high end of market expectations. With the high valuation comes tremendous growth potential in Mexico, and AB InBev clinches one of the last few large beer assets left in the region. In the deal, AB InBev will pay $9.15 per share, about 30% more than the price of Modelo shares before talks were first disclosed June 25. In a related deal, US distributor Constellation Brands will buy Modelo’s stake in their US distribution joint venture for $1.85bn. The combined company should deliver cost and revenue benefits of at least $600m annually, according to AB InBev. Though Modelo’s controlling families had long been expected to only sell high, the acquisition price represents a multiple of about 16.2x Ebitda, compared to an average of about 12x-13x for international beer deals. It was higher than the 14x-15x level that analysts were estimating when the two sides announced they were discussing a deal earlier in the week. “A rich multiple is worth it given the growth potential for Mexico, the savings upside and potential for Corona as a global brand. Some may be disappointed by the fact that ABI has not secured US distribution, but looks like the anti-trust issues were too overwhelming,” UBS says in a report. Constellation will have control of distribution, marketing and pricing for all Modelo brands in the US. AB InBev will have the right to exercise a call option on the Modelo brands every 10 years. AB InBev is doing its best to block out its global competitors in the region. It paid $1.24bn for control of Cerveceria Nacional Dominicana in April. AB InBev plans to fund the acquisition with a 3-year, $8bn term loan and a $6bn credit facility for up to 2 years. The loan package is arranged by 11 of the brewer’s relationship banks, CEO Carlos Brito says on a conference call, and will cost “around 2%.” Bank of America, Santander, Bank of Tokyo-Mitsubishi, Barcla
AB InBev Seen Gunning for Rest of Modelo
Mexico’s Grupo Modelo is in strategic talks with Anheuser-Busch InBev, to expand its current relationship, it says, leading to speculation that a takeover is in the works. Analysts say a deal for all of Model or for control of it would make sense for AB InBev, which already owns a non-controlling 50% stake in Modelo. “It would be a very logical purchase for AB InBev,” says an equity analyst who covers the company, nothing that the market has long expected it. The value is seen as coming with at least some premium to the 11x-13x Ebita multiples seen in recent Beer mergers, including SABMiller-Fosters and Heineken-Femsa. A valuation of 15x for Modelo would imply a price of roughly $14bn, the analyst notes. Estimating the value is difficult, as it is unclear if the possible deal would include payment to Constellation Brands to buy a stake in a distribution joint venture. “A take-out price would be closer to $15bn, equating to a 30% control premium (in line with historical average brewing sector premiums),” Citi says in a report. The bank calls the potential deal strategically “excellent,” noting tremendous upside in Mexico’s beer market and would be 1% accretive to AB InBev’s earnings in year 1. “These discussions may or may not lead to a consummation of a transaction and any speculation on the terms and conditions is premature,” Grupo Modelo says.
Pemex Gets Exim Funds, Preps Bonds
The US Export-Import Bank has authorized $1.2bn export financing for Mexico’s Pemex, it says, which the oil producer will seek to use in the form of guaranteed bonds. Pemex anticipates 4-7 such US Ex-Im guaranteed issuances in the capital markets in the next few months for up to $1bn, but does not offer additional details. In the event bond funding is not feasible, US Ex-Im could provide direct loans. The package also includes a $200m facility to support purchases from US small businesses. Proceeds would fund oil and gas exploration projects.
Aeromexico Gets Exim Funds
The Export-Import Bank of the United States (Ex-Im) has approved two final commitments for $171m in guaranteed peso-denominated loans to Aeromexico, it says. Proceeds will support the export to Aeromexico of passenger aircraft, as well as various goods and services to be provided by a variety of US exporters. The guaranteed lenders are Banamex and HSBC. It does not disclose further details. The transaction effectively triples Ex-Im support for Mexican aviation companies purchasing goods and services from US companies, the bank says. Earlier this month, Delta finalized a $65m investment in the Mexican carrier.
US E&P Exits Vene
Harvest Natural Resources has agreed to sell its 32% stake in a Venezuelan oil exploration project to Indonesia’s PT Pertamina for $725m, it says. The all-cash sale concludes a process that the US-based oil company had initiated in March. In the deal, PT Pertamina acquires the stake in the Petrodelta project, of which PDVSA is a partner, by buying Harvest’s 80% stake in Harvest-Vinccler Dutch Holding BV. Net proceeds are expected to be $525m. The transaction is subject to government approval in Venezuela and Indonesia, as well as by shareholders. The boards of Harvest and Pertamina have each approved the transaction. As of end 2011, the Petrodelta venture controls roughly 194m barrels of oil in 3P reserves, a combination of proved, probable and possible reserves held underground, a 1% decline from 2010, following Harvest’s reserve review.
US Chemical Specialist Shops in Chile
US chemicals producer Air Products has agreed to acquire a 67.0% stake in Chilean industrial gas producer Indura for CLP451bn ($884m), it says. The transaction consists of CLP351bn in equity and CLP100bn in debt, and implies an enterprise value to Ebitda multiple of 13x, according to Air Products. The deal is to be completed in 2 stages, which the company declines to specify, noting only that the first portion will give it majority control and close in early July, with the second portion closing within twelve months and bringing its ownership to 67%. Air Products plans to fund the purchase with debt sourced from the US market and converted to pesos, and will have a bridge loan available for 3 months which it does not expect to draw down. The move expands Air Products’ Latin America footprint in a high growth market, and is expected to be accretive to its earnings per share starting in FY2013. There is a put option for the founding Briones family to sell the remaining interest, exercisable at fair market value in year 4 and 5. Indura has annual revenues of more than $478m, with operations in Argentina, Chile, Colombia, Ecuador, Mexico and Peru. Air Products has a presence in Argentina and Brazil and a joint venture in Mexico. It did not disclose its advisors.
Tenaris Unit Closes Loan
Maverick Tube Corporation, a part of the Tenaris group, has closed a $350m, 3-year amortizing syndicated loan, according to sources familiar with the matter. The deal pays Libor+225bp The oversubscribed transaction included participation from 11 banks. Santander and Standard Chartered were senior MLAs, with Natixis and Wells Fargo as MLAs. Credit Agricole, Citi, JPMorgan, Bank of Tokyo-Mitsubishi and Itau were joint bookrunners, Scotia acted as Co-Arranger and Banco do Brasil was a participant. The deal is backed by Tenaris’ Hydril Company, which was acquired in 2007. Tenaris acquired US-based Maverick in 2006.
Costco Buys Out CMM in Mexico JV
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.