Author: Antonio Guerrero

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By Antonio Guerrero

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Flying high: Embraer sees rise in order backlog

Spain’s Telefónica agreed to buy Portugal Telecom’s stake in Vivo, Brazil’s largest mobile-telephony provider, for $9.8 billion. With 56 million clients, Vivo has an estimated 30% share of the Brazilian wireless market. Telefónica will merge Vivo with Telesp, its Brazilian fixed-line unit. In a separate transaction, Portugal Telecom acquired a 22.4% stake in Oi, Brazil’s largest phone company, for $4.8 billion.

Repsol YPF, Spain’s largest oil company, expects to raise some $4 billion through an IPO of its Brazilian operations. Proceeds will be used to fund oil exploration and production in Brazil, where it holds an interest in the Guará and Tupi offshore fields. Banco Santander, Bank of America and Itaú Unibanco are among banks cited as arranging the IPO. Carlyle Group, the global private-equity firm, has taken a controlling stake in Grupo Qualicorp, a Brazilian healthcare services company, for $1.2 billion. Qualicorp manages private health insurance plans and provides brokerage and consulting services.

Carlyle Group and Brazilian banking giant Banco do Brasil joined forces in July to create a $226 million fund to acquire control of medium-size Brazilian companies, with a focus on those with international growth potential.

Brazil’s robust economic growth, which has boosted household income and reduced unemployment, is being reflected in quarterly bank profits. Itaú Unibanco, Brazil’s largest private-sector bank, posted a higher-than-expected 36% rise in second-quarter profit. Bradesco, the country’s second largest private-sector bank, also outperformed analysts’ forecasts.

Brazil-based Embraer, one of the world’s largest airplane makers, expects its backlog of orders for commercial aircraft to hit $17 billion by year-end, as airlines place new orders. This includes 37 firm orders booked at July’s Fairnborough Air Show in the UK. The improved outlook led several banks to raise their recommendations on Embraer’s stock, including Banco Santander’s hike to “buy” from “neutral.”