Author: Gordon Platt

LATIN AMERICA TAKES MERGER SPOTLIGHT

By Gordon Platt

Mergers in Mexico and Brazil that will create strong regional and global competitors in a number of industries overshadowed a dormant M&A; market in the United States in January.

In Mexico, Carlos Slim, one of the richest men in the world, orchestrated a consolidation of his telecom empire. America Movil, Latin America's leading mobile-phone services provider, which Slim controls, plans to acquire Mexican telephone company Telmex and Telmex Internacional through holding company Carso Global Telecom. The combination will create a regional telecom with 250 million subscribers and the ability to offer integrated voice, data and video services independent of the platform on which they are generated.


America Movil planned to launch a tender offer to acquire Carso Global Telecom in a stock-swap transaction valued at $27.55 billion. At the same time, America Movil planned a second tender offer to acquire the remaining 39% stake it did not already own in Telmex Internacional in a stock-swap deal valued at $6.6 billion. Credit Suisse advised America Movil on both transactions. Following the acquisitions, Slim plans to delist Carso Global Telecom and Telmex Internacional, which offers data and Internet services in six countries in South America. Telmex will remain a publicly traded company and will have a separate management.


In Brazil, Braskem agreed to acquire a 60% interest in petrochemicals manufacturer Quattor Participacoes from rival Unipar in a deal valued at more than $4 billion, including the assumption of $3.68 billion in liabilities,
according to Thomson Reuters. Braskem, which was advised by Morgan Stanley and Banco de Santander, said it would issue new stock valued at about $2.5 billion to help fund the takeover and to enable it to make further acquisitions. CEO Bernardo Gradin says Braskem continues to be interested in assets in the US.


Quattor is Brazil's second-largest petrochemicals firm after Braskem, and the merger will create a top-10 global competitor in the industry. The combined company will produce 100% of Brazil's most widely used plastics resins, including polyethylene, polypropylene and PVC. As part of the deal, Braskem's two main shareholders, construction and industrial conglomerate Odebrecht and state-run oil producer Petrobras, will merge their stakes and infuse nearly $2 billion in new capital into the company.


Also in Brazil, global mining company Vale agreed to acquire White Plains, New York-based Bunge's fertilizer nutrients assets, as well as its phosphate mines in the South American country for $3.8 billion in cash. Bunge will keep its retail fertilizer operations in Brazil and will sign a supply agreement with Vale that runs through 2012, with an option to extend it for one additional year. Bunge also will retain its fertilizer businesses in the US and Argentina and its 50% joint venture with Office Chérifien des Phosphates in Morocco, which is the world's largest exporter of phosphates.


Alberto Weisser, Bunge's chairman and CEO, says the deal with Vale will allow the US-based agricultural, food and ingredients producer to further expand in complementary areas, such as the sugar industry. It announced in December 2009 that it would buy a sugar and ethanol producer based in Brazil. "We see compelling opportunities for growth by building on our global footprint and leveraging our commercial, logistics and risk management capabilities across a larger product portfolio," Weisser says. Bunge also plans to use a portion of the proceeds of the transaction to reduce its outstanding debt.


Vale is the world's largest producer of iron ore. The company also produces bauxite, copper, coal, cobalt and precious metals. It operates railroads, maritime terminals and a port in Brazil, which are integrated with its mining operations.


Mergers and acquisitions involving companies based in Latin America that were announced in 2009 totaled $106 billion, down from $146 billion in 2008, according to Thomson Reuters.

AMERICAS M&A;: TOP DEAL ADVISERS
Adviser

Rank Value

($billion)

Rank

% Mkt

Share

# of Deals
Credit Suisse

45. 8

1

50.6

5
Santander 32. 1 2 35.5
7
Citi

25. 2

3

27.8

5
Barclays Capital

11. 8

4

13.0

2
Tudor Pickering

11. 8

5 13.0 1
Industry Totals* 90.6* - 724
EUROPE M&A;: TOP DEAL ADVISERS
Adviser

Rank Value

($billion)

Rank

% Mkt

Share

# of Deals
Goldman Sachs

16. 3

1

62.8

3
Greenhill 10. 6
2

40.6

1
Rothschild

8. 1

3

31.0

6
Deutsche Bank

6. 7

4

25.9

3
Lazard

6. 6

5

25.2

4
Industry Totals*

26.0*

-

762

ASIA M&A;: TOP DEAL ADVISERS

Adviser

Rank Value

($billion)

Rank

% Mkt

Share

# of Deals
Nomura

7. 6

1 27.9 9

Deutsche Bank

3. 5

2

13.0

3

Goldman Sachs

3. 5
3

23.0

7

Morgan Stanley

3. 4

4

12.5

3

Standard Chartered

2. 6

5 9.7 2

Industry Totals*

27.1*

- 717
January 1, 2010-January 31, 2010

*Figures may not add up as more than one bank typically obtains credit for any one transaction.

Source: Thomson Reuters

Top Mergers & Acquisitions in January 2010

AMERICAS
Date Announced

Target Name

(Target Advisers)

Country

Acquirer Name

(Acquirer Advisers)

Country Description

Ranked Value

($billion)

1/13/10

Carso Global Telecom

(Banco de Santander)

Mexico

America Movil

(Credit Suisse)

Mexico Planned to launch a tender offer to acquire provider of telecom services, in a stock-swap transaction.
27.55
1/13/10 Telmex Internacional Mexico America Movil (Credit Suisse)
Mexico Planned to launch a tender offer to acquire the remaining 39.3% stake, which it did not already own, in a
stock-swap transaction.

6.60

1/22/10

Quattor Participacoes

(Estater Gestao e Financas)

Brazil

Braskem

(Morgan Stanley)

(Banco de Santander)

Brazil Agreed to acquire a 60% interest in petrochemicals firm from Unipar; includes assumption of $3.68 billion in liabilities.

4.04

1/15/10

Bunge Participacoes

e Investimentos

(Credit Suisse)

Brazil

Vale

(Deutsche Bank)

Brazil

Agreed to acquire producer of

agricultural products.

3.80

1/4/10

Chesapeake Energy’s upstream

Barnett Shale assets

(Jefferies)

US Total E&P; USA
US Acquired a 25% stake in assets located in Texas.

2.25

1/14/10

Bare Escentuals

(Goldman Sachs)

US

Shiseido

(Bank of America Merrill Lynch)

Japan Launched a tender offer to acquire manufacturer of cosmetics and skin-care products.

1.87

1/19/10

Allied Capital

(Bank of America Merrill Lynch)

(Sandler O’Neill Partners)

US Prospect Capital
US Planned to launch an unsolicited, challenging offer to acquire business-development company, in a sweetened stock-swap transaction.

0.90

EUROPE
1/4/10

Alcon

(Greenhill)

Switzerland

Novartis

(Goldman Sachs)

Switzerland Planned to acquire the remaining 23% stake, which it did not already own, in pharmaceutical manufacturerin a stock-swap transaction.
10.57
1/25/10

NR Nordic & Russia

Properties

(Numis Securities)

Jersey

Holowent

(Lazard)

UK Planned to launch a tender offer to acquire the remaining 75.35% interest, which it did not already own, in real estate investment firm.
0.59
1/20/10 Sevemoye zoloto Regionruda
Russia

Kinross Gold

(Rothschild)

Canada Planned to acquire gold-mining company for cash and newly issued shares.
0.37
1/5/10

Metrovacesa

Spain

Barclays

(Barclays Capital)

UK

Exercised its option to acquire a 6.98% stake in real estate agency from Grupo Sanahuja, for a reduction in debt.

0.32

ASIA

1/18/10

Orient Overseas

Development

(Morgan Stanley)

Hong Kong

CapitaLand China RE

Holdings

Hong Kong Agreed to acquire real estate development firm for cash.
2.20
1/6/10

SMC

(Credit Suisse)

Philippines Top Frontier Holdings Philippines Planned to launch a tender offer to acquire the remaining 54.2% interest, which it did not already own, in San Miguel, a producer of malt liquors.
1.52

1/21/10

EON Capital

(Goldman Sachs)

Malaysia

Hong Leong Bank

(CIMB Investment Bank)

Malaysia Planned to launch a tender offer to acquire investment holding company for cash.

1.46

1/19/10

Neo-China Land Group Holding
Hong Kong

Novel Good

(UBS Investment Bank)

(Nomura Securities)

Hong Kong Unit of state-owned Shanghai Industrial Holdings planned to launch a mandatory tender offer to acquire the remaining 54.98% of real estate development firm.

1.29

1/6/10

Cedyna Financial

(Nomura Securities)

Japan

SMFG Card & Credit

(Goldman Sachs)

Japan Subsidiary of Sumitomo Mitsui Financial agreed to raise its interest to 67.66% by acquiring a 40.08% stake in provider of credit card services.

0.54

1/6/10

SMC

(Credit Suisse)

Philippines Top Frontier Holdings
Philippines Planned to raise its stake to 36.49% by acquiring a further 10.08% stake from Q-Tech Alliance Holdings.

0.53

Source: Thomson Reuters