Eike Batista’s EBX Group has signed a deal with IBM that includes selling the US company a 20% stake in Six Automacao, EBX’s technology company. The deal also contemplates a 10-year $1bn IT outsourcing contract where IBM will handle EBX’s IT operations, the Brazilian company says. Both companies will also create a center to develop technology solutions for infrastructure and natural resources. EBX declines to say if IBM paid for the 20% stake in its subsidiary or if the stake was given as payment for the $1bn services contract. Officials at EBX decline to comment further and IBM officials could not immediately comment on the details of the deal. If the stake in the EBX subsidiary was agreed as payment for the $1bn contract, this would put a $5bn value on EBX’s unlisted technology subsidiary. The IBM agreement comes just days after Batista sold a 5.63% stake in EBX to the Abu Dhabi sovereign wealth fund, Mubadala Development company, for $2.0bn, a price that valued the group overall at $35.5bn.
Category: United States
EI Buys into Brazilian Developer
Equity International, a Chicago-based private equity firm, has acquired a stake in Brazilian property developer Grupo Tha. The deal gives EI, a firm founded by Gary Garrabrant and Sam Zell, 2 seats on the board of Grupo Tha, it says. An official at EI declined to provide any details of the transaction citing a request from the target company. Grupo Tha has developed more than 2,000 real estate projects across a number of sectors, but mostly operates in the Southeastern part of Brazil. EI typically holds on to investments anywhere between 3 to 7 years and invests an average of $75m in target companies. Last year, the private equity firm paid $75m for an undisclosed stake in Terranum Development, a unit of Colombian real estate developer Terranum, and paid another $58m for a participation in Brazilian self-storage company GuardeAqui. The latest venture into the Brazilian real estate development is largely a bet on the growing housing needs of a burgeoning Brazilian middle class, especially in the country’s industrial south, where Grupo Tha has an important presence.
PdVSA Settles Nationalizations with Americans
Venezuela’s PdVSA has agreed to pay US companies Williams and Exterran for the gas compression and injection assets they lost to a Venezuelan nationalization campaign in 2009, the companies say. So far the government-owned oil company has paid a combined $121.6m to both companies as an initial payment for the assets at the WilPro El Furrial and WilPro PIGAPII, two natural gas ventures in the Andean country. An additional $239.8m will be paid to the two companies in several installments over the coming years up until 2016, according to the companies. At the time of the asset takeover, Williams held a 66.66% stake in El Furrial and a 70% stake in PIGAP II, with Exterran holding the remaining stake in these ventures. Exterran has received an initial payment of $37.6m for its participation in these ventures with a remaining $74.8m to be paid in the next 4 years. Williams in turn has received an $84m initial payment with $165m to be paid gradually until 2016. Williams has also received an additional $63m for its stake in Accroven, a venture that includes natural gas liquids extraction and feractionation plants, as well as storage and refrigeration facilities. Officials at Exterran declined to offer additional details of the compensation terms and how the money paid compares to the value of the assets lost. An investor relations officer at Williams could not immediately comment on the deal. PdVSA officials could not be reached for comment. As per the agreement with PdVSA, Williams and Exterran have suspended their arbitration against Venezuela pending the final compensation settlement. Over the past 6 months, Venezuela has sought to settle a number of outstanding compensation claims with companies that lost assets during the nationalization drive led by the administration of President Hugo Chavez.
JBS Again Grows Stake in Pilgrim’s Pride
Brazil’s JBS has spent $107.2m to buy an additional 18.9m shares in US chicken producer Pilgrim’s Pride (PPC). The purchase, which represents an offer of $5.69 per share, increases the meatpacker’s stake in the company to 75.3% from 68%, the company says. JBS’ purchase comes just days after announcing that it raised its stake to 68% from 67.2% during a recent PPC capital increase. The Brazilian company purchased practically all the remaining shares owned by company founder Lonnie “Bo” Pilgrim. A spokesman for JBS said the company sees the potential for further efficiencies at PPC in the process of transforming it from a chicken producer to a more global food producer. The spokesman dismissed talk that the price offered was a discount to the market price and would only say that the transaction was a privately negotiated block trade deal. Shares of Pilgrim’s Pride on Wednesday closed at $7.41, up 2.77% from the previous day’s close. PPC officials could not be reached for additional comment. PPC registered overall sales of $8bn in 2011 and has seen an average normalized Ebitda margin that ranged between 6% to 8% over the past 5 years.
Prestige Brands Rebuffs Genomma Offer
Prestige Brands (PBH), a US healthcare and cleaning brands company, has rejected an unsolicited bid by Mexico’s Genomma Lab, which last month offered $834m for the company, it says. The PBH board voted to reject Genomma’s $16.60 per share offer, calling the 23% premium “well below comparable transactions.” The board also noted that the implied Ebitda multiple of the offer undervalued PBH at a time when it is still in the process of absorbing previous acquisitions. A spokeswoman at PBH said the offer as directed to the board was not viable, and said that Genomma has not made a tender offer for the shares. Genomma officials did not return calls for comment. The Genomma offer represents an implied 9.5x Ebitda multiple in a best case scenario, according to Janney Capital Markets, which also says the offer likely “undervalues Prestige’s shares.” Despite the rejection, however, the board appeared open to a sweetened offer. “We would be open to compelling, fully financed offers that provide certainty of closing. Should Genomma Lab make such an offer, there would be a basis to engage with them,” PBH says. In late February, Genomma sent a letter to the PBH board suggesting a hostile takeover could ensue should the board reject its bid for the company. Following the offer, PBH adopted a shareholder rights plan, better known as a ‘poison pill’, in an attempt to preempt Genomma’s purchase of shares. PBH owns a number of brands, including Spic And Span, Comet and Dramamine.
Vitro Secures Legal Protection to US Assets
Troubled Mexican glassmaker Vitro obtained a temporary restraining order from the US Bankruptcy court in Dallas that will help the company protect its assets from creditors as it proceeds with the restructuring of $3.6bn in debt, including $1.9bn in intercompany obligations. The court’s move is a step before it decides whether to give a nod to Vitro’s motion of enforcing its debt restructuring plan in the US, Vitro says. The court’s decision can block Vitro boldholder funds from attempting to seize accounts receivable Vitro collects from US customers. The Mexican company finalized its debt restructuring plan in late February, despite staunch opposition from bond holders. The company pushed forward the unpopular deal by counting internal company debt owed to its own subsidiaries to gain a majority vote it its own debt restructuring. Debt holders have attempted several legal challenges to Vitro’s debt restructuring, but the company has a so far gained approval for the plan from the Mexican legal system. As it stands, the company’s restructuring proposal includes $814.7m in new 2019 bonds, a fee of up to $32.7m and mandatory convertible debt of $95.8m. JPMorgan has estimated that creditors who accept the deal may recover between 48 and 60 cents on the dollar, depending on the level of debt holder support.
JBS Ups Stake in Pilgrim’s Pride
Brazilian meatpacker JBS has paid $143.3m to increase its stake in US chicken producer Pilgrim’s Pride to 68%, through the most recent company share offering. Pilgrim’s sold 44.4m new shares at $4.50 per share to revamp its capital structure, and through that offer, JBS spent $134m to maintain its original 67.2% stake, a Pilgrim’s spokeswoman confirms. JBS spent an additional $9.3m to raise its stake to 68%, based on company data. The Pilgrim’s spokeswoman declined to offer additional details and JBS officials could not immediately be reached for comment. Pilgrim’s managed to secure $200m from the sale of the new shares. JBS first acquired a stake in Pilgrim’s in 2009 with the financial backing of Brazil’s BNDES development bank.
CME, Bovespa Strike Cross-Listing Deal
The Chicago Mercantile Exchange Group (CME) has struck a deal with Brazil’s BM&FBovespa (BVMF) for the cross listing and licensing of traded index- and commodities-based futures, it says. Under the deal, the CME will list dollar-denominated futures of the Bovespa, while the BVMF will offer dollar-denominated S&P 500 index futures settled in BRL. The Brazilian market will also list the Chicago Board of Trade’s Mini-sized Soybean futures and the New York Mercantile Exchange’s Light Sweet Crude Oil (WTI) futures in the second and third quarters of this year, respectively. Officials at the CME were not immediately available for comment. A BVMF investor relations officer says the deal involves an agreement to share the revenue generated by the trading of these securities, in which the owner of the security will take the larger share of the revenues. He declined to offer details of the deals, however. The BVMF official said the market will also pay a license for the use of the S&P 500 product and for the market data generated by the trading of the futures contract at the CME.
US E&P Co Plans Venezuela Divest
Harvest Natural Resources (HNR), a Houston-based independent oil company, is aiming to sell off its 34% stake in the Petrodelta oil project in Venezuela. The company has already started talks with a potential “third party” to sell off its share in the venture in which it is partnered with state-owned Petroleos de Venezuela, PdVSA, the company says. A spokeswoman for Harvest declined to offer additional details of the ongoing process. Officials at PdVSA could not immediately be reached for comment. HNR has said that it began negotiations for the assets on March 5, but noted that there is no guarantee the talks will result in a final sale. 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 HNR’s reserve review.
Prestige Brands Takes Poison Pill in Genomma Lab Offer
Prestige Brands Holdings (PBH), a US healthcare and house cleaning products company, has moved to adopt a shareholder rights plan, following last week’s hostile takeover bid by Mexican pharmaceutical marketer Genomma Lab. The PBH board adopted the plan, a strategy better known as a “poison pill,” after Genomma offered to acquire the company’s outstanding shares at $16.60 per share. The aim is to “allow the board of directors adequate time and opportunity to explore, develop and consider any and all alternatives,” the company adds. A poison pill typically dilutes a buyer obtaining a certain percentage of a company, a move that prevents the acquirer from sidestepping a negotiation with a target’s board and dealing directly with shareholders. PBH has not made public the details of its shareholder agreement, but says it will expire after the 2013 annual meeting. Officials at Prestige Brands could not immediately offer additional details. Genomma Lab could not be reached for comment. Last week, Genomma unveiled an offer to shareholders of $834m for the company’s equity, as well as assuming $891m in debt. Overall, the deal implied 9.5x Ebitda, according to calculations by Janney Capital Markets, which deemed the transaction “dubious.”