Peru was at the center of Latin America’s M&A markets in March and April, amid a quieter than expected start to the year. Latin America-targeted M&A volume was $18.2 billion in the first three months of the year, the lowest quarterly volume since 2005 and down 41% from the same period in 2012 – even though the global total was up 18%.

Growth was an important consideration for Chile’s Empresa Nacional de Telecomunicaciones (Entel), when it paid $400 million cash for Nextel’s Peruvian operations. Entel plans to reserve funds for the acquisition partly by reducing its dividend payout to 50% percent of profit, compared to levels of 80% in the past. That strategy, along with a perception that the buyer paid a high price, disappointed markets. The growth possibilities are attractive, but Entel will face entrenched competition from Carlos Slim- and Telefónica-owned operations, analysts say. Asset Chile and BNP Paribas advised Entel. Deutsche Bank advised Nextel. Nextel, for its part, is also contemplating the sale of businesses in Chile and Argentina, to focus on Brazil and Mexico.

On the coast, fishmeal and fish oil exporter Copeinca fended off a takeover from China Fisheries (CFG), thanks to a $610 million bid from Norwegian white knight Cermaq. CFG had made a $550 million unsolicited offer in February that Peru’s second-largest fishery found too low. Cermaq agreed to buy 51% immediately and will tender for the rest. The deal adds to the Norweigan’s vertical integration. Carnegie, DNB Markets and UBS, hired to fend off CFG, advised Oslo- and Lima-listed Copeinca. ABG Sundal Collier advised Cermaq.

International miner Glencore is expected to sell the $5.2 billion Las Bambas copper mining project in southern Peru, to satisfy Chinese regulators approving its merger with Xstrata. Chinese miners Jiangxi Copper, Chinalco Copper and China Minmetals are among the potential buyers.


Eike needs partners

In Brazil, the sale of a stake in power generator MPX to E.ON is expected to be followed by other sales of minority positions in EBX family companies as they continue to look for cash. E.ON, already a joint venture partner with MPX, agreed to pay at least 1.78 billion reais ($886 million) to increase its stake to 36%. MPX now plans a public follow-on sale of primary shares, in which E.ON has committed to exercise its rights for at least 367 million reais. The two parties’ existing joint venture is also to be folded back into MPX.

Eike Batista, whose EBX holding company took $2.3 billion worth of direct investment from Mubadala and General Electric last year, is expected to seek additional outside investment at other operating companies. Markets were optimistic on the announcement in April that Petrobras is studying partnerships with EBX. A strategic partnership with BTG Pactual secured a $1 billion credit line and management support.

Elsewhere in the oil industry, Canada-based LatAm-focused Tuscany International Drilling is exploring strategic alternatives to curb a falling share price. The driller has hired Black Spruce Merchant Capital and Citi as financial advisors and could take action as soon as this year. Tuscany is considering options such as a private equity partner, merger, or bolt-on acquisition.

Grupo Security expands

Chilean financial services company Grupo Security will acquire insurer Cruz del Sur from the Angelini Group, for about $300 million. The deal includes insurance, investment and brokerage businesses operating under the Cruz del Sur brand. JPMorgan advised Security, which plans to issue additional equity and domestic bonds to help pay for the deal.

Mexichem continues to grow beyond its home market, buying the base resin assets of PolyOne for $250 million. The US seller is divesting assets to focus on specialty chemicals. The deal boosts Mexichem’s US footprint, especially in the niche market for custom products. HSBC advised the target.

Grupo Herdez was set to acquire Mexican health and nutrition food company Grupo Nutrisa for as much $245 million-equivalent. It launched a tender in April for the 33% of Nutrisa it didn’t agree to buy directly in a January deal. The company is looking to the bond and loan markets to fund the purchase. LF