Latin Finance - September/October 2010 - 10

M&A

LatAm Jumbo

LatAm-targeted M&A reached $115.1 billion in the ﬁrst half of 2010, which according to Dealogic, is the highest half-year volume on record for the region and more than double the ﬁrst half 2009 trade of $40.7 billion. Airlines and telecoms are among The Carlyle Group has acquired a controlling stake in Brazilian the standout sectors, and the trend looks set to continue for the health beneﬁts manager Qualicorp. While it does not disclose remainder of the year. terms of the deal, sources familiar with the deal say Carlyle got Unlike in 2007, capital markets are discounting smaller a 70% stake and paid a price that values the entire company at players, making M&A more attractive. $1.2 billion. Qualicorp management Entities too small to ﬂoat now are M&A Rank by Volume, Year to August 13 will retain the remaining minority stake Credit Suisse ﬂow balloons seeing plenty of interest from private not acquired by Carlyle. investors, say bankers. Besides an Part of the stake was purchased from Rank Advisor Value $m # Deals abundance of cheap capital, also US-based global growth investment 1 Credit Suisse 40,066 19 fueling the trend is the perception in shop General Atlantic, which according 2 Morgan Stanley 30,029 12 the old money centers of Europe and to a spokeswoman, purchased “a large 3 JPMorgan 22,553 25 the US that there are limited growth minority stake” in Qualicorp in 2008. 4 BofA Merrill 21,545 17 and investment opportunities at home. “This was the largest healthcare sector 5 BTG Pactual 15,778 19 In a bid to create a LatAm airline investment we had,” she adds. Carlyle’s 6 Citi 14,581 7 ﬁt to compete globally amid increased ﬁnancial advisor is Banco Bradesco BBI. competition from abroad, Chile’s LAN Qualicorp was advised by Credit Suisse 7 UBS 14,374 9 and Brazil’s TAM announced plans and BR Partners. 8 Rothschild 14,220 10 to merge. The union would forge 9 BESI 14,134 6 the world’s ﬁfteenth biggest airline 10 Caixa Geral 12,996 5 by revenue and eleventh biggest by British Petroleum’s (BP) oil spill Subtotal 83,436 84 passenger numbers, based on 2009 problems in the Gulf of Mexico are Total 121,067 843 data. spurring some cross-border M&A deals Source: Dealogic Each TAM share will be exchanged in LatAm. Recently, Colombian oil giant for 0.9 LAN shares and the new Ecopetrol and Canada-based Talisman partners expect $400 million in Energy announced they were acquiring M&A Rank by Fees, Year to August 13 JPMorgan closing on Credit Suisse annual synergies in the all-stock deal. BP’s oil and gas exploration, production Synergies are expected from alignment and transportation assets in Colombia Rank Bookrunner Revenue $m % Share of passenger networks, growth in the for $1.9 billion in cash. 1 Credit Suisse 39 10.50 cargo network – both internationally Ecopetrol will get a 51% stake and 2 JPMorgan 33 8.90 and in Brazil – and cost cutting. Talisman the remaining 49%. Ecopetrol 3 BofA Merrill 32 8.60 Management expects to be able to says the deal includes a 25% stake in 4 Deutsche Bank 28 7.60 implement approximately one third the Ocensa pipeline, a 14% stake in of the synergies within the ﬁrst year, the Colombia pipeline, and a 4% stake 5 Banco Itaú 26 7.10 following the close of the transaction in the Alto Magdalena pipeline. It also Subtotal 158 42.70 and all synergies by the end of the includes a 20% stake in Transgas de Total 370 100.00 third year. Occidente. Excluded from the deal is Source: Dealogic The new airline, to be known BP’s Castrol lubricants business and as LatAm Airlines, had combined other downstream oil activities, BP says. revenues of $8.5 billion in 2009. TAM and LAN say they will Although BP is in need of selling, the Colombian assets operate as distinct airlines and independent brands, with HQs in were not sold cheaply. “Ecopetrol has paid $20.15 per barrel of Santiago and São Paulo to remain. probable and proven reserves versus the $9.00 it paid for Hocol TAM vice chairman Mauricio Rolim Amaro will chair the two years ago,” says Celﬁn. Goldman Sachs advised Talisman and combined board, while LAN CEO Enrique Cueto will be the new Barclays Capital advised BP. CEO. “This will position us to compete with the foreign carriers Elsewhere, Grupo Aval, the parent company of Banco de that continue to increase service to our region,” says TAM CEO Bogotá, Banco Popular and Corﬁcolombiana, among other Marco Bologna. JPMorgan was LAN’s ﬁnancial advisor while ﬁnancial institutions, agreed to acquire Panama-based regional BTG Pactual advised TAM. bank BAC-Credomatic for $1.9 billion. LF Elsewhere, Telefónica’s bought a 50% stake in Brasilcel for a rich €7.5 billion, following many months of trying. The valuation UPDATE > was around 11 times Ebitda, high versus comparables. For breaking M&A news, see www.latinﬁnance.com Seller Portugal Telecom was not about to get pushed out of

Brazil, so it made a purchase of its own, acquiring a 22.4% stake in the country’s largest telecom, Oi, for 8.4 billion reais. UBS and Credit Suisse advised Telefónica, while Bank of America Merrill Lynch advised Portugal Telecom.

PE Eyes Brazil

Colombians Go Shopping

10 LATINFINANCE

September/October 2010

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Latin Finance - September/October 2010

Table of Contents for the Digital Edition of Latin Finance - September/October 2010