Latin Finance - November 2008 - 14

M&A investors the deal’s closing had been suspended due to market conditions. The result bodes ill for Lorentzen, which had signed a document with VCP’s parent Votorantim to sell the M&A has been by far the most resilient and lucrative LatAm stake for $1.7 billion in mid-September. business this year, but bankers say market turmoil is starting Other deals that have fallen include Cyrela’s $1.1 billion to bite. “M&A business will stop for at least the next three acquisition of Agra Empreendimentos, to be paid for in months,” Corrado Varoli, a founding partner of advisory and shares, though the companies said the deal fell apart because asset management boutique G5 Advisors in São Paulo, tells of regional incompatibilities. And LatinFinance mid-October. That last month Mexico’s Minera Autlán could continue for longer M&A Rank by Volume, Year to October 20 gave up on selling itself, following depending on the how long it takes Citi jumps to second place several months of deliberating over markets to find a footing, he adds. pitches from an array of global “This is an environment where Rank Advisor Value $m # deals suitors. people don’t want to assign 1 Credit Suisse 35,050.38 28 valuations to assets,” says Varoli, 2 Citi 19,803.07 21 echoing the words of senior M&A 3 Rothschild 19,592.53 16 bankers at bulge bracket firms Brazil’s CSN has agreed to sell a 4 JPMorgan 18,997.94 24 active in Brazil. 40% stake in Namisa, an iron ore 5 UBS 15,380.63 24 Luiz Muniz, head of Rothschild mining complex, for $3.12 billion, 6 Morgan Stanley 14,744.25 15 Brazil, says pure M&A activity has valuing the entire project at $7.8 7 Banco Itaú 10,749.32 3 been declining and will continue to billion. The price tag, subject of 8 Goldman Sachs 10,664.02 6 fall substantially in coming months. much speculation throughout the 9 Bradesco 9,781.03 6 “In order for transactions to take past six months, seems initially to 10 Lazard 3,286.68 4 place you need to have suggest a favorable outcome for Subtotal 64,539.78 102 predictability and people need to be CSN. The winning consortium is Total 116,986.48 1,020 comfortable with the future made up of Itochu, Nippon Steel – Source: Dealogic outlook,” he notes. Both elements which owns a 22% stake in were sorely lacking last month. Usiminas – JFE Steel, Korea’s Posco, A dearth of debt financing adds Sumitomo Metal Industries, Kobe M&A Rank by Fees, Year to October 20 to the low level of conviction in Steel and Nisshin Steel. JPMorgan rises two places deals, notes Muniz. He adds that The process to sell Namisa began Rank Advisor Revenue $m % Share some transactions will still get in earnest in May, when the company 1 Credit Suisse 103.81 23.41 done, especially those relying less hired Goldman Sachs to advise. CSN 2 Citi 69.00 15.56 on cash and more on equity. But in executives suggested at the time the 3 Rothschild 41.21 9.30 general he sees his shop’s business asset could be worth up to $11 4 JPMorgan 33.41 7.54 as being geared towards balance billion, though some analysts said 5 UBS 32.21 7.27 sheet management, restructuring they did not think the asset was 6 Goldman Sachs 26.89 6.07 and changes in ownership structure. worth more than $6 billion. 7 Banco Itaú 19.34 4.36 Varoli predicts a resumption in Elsewhere, MAG Silver tapped 8 Merrill Lynch 15.37 3.47 activity once stability prevails. Macquarie to act as financial 9 Morgan Stanley 14.94 3.37 Dramatic shifts in the market advisor for strategic alternatives. 10 Bradesco 13.23 2.98 framework are typically followed by London-based Fresnillo recently Subtotal 369.41 83.32 active periods for M&A as new types increased its stake in VancouverTotal 443.36 100.00 of valuations, targets and based MAG Silver to 18.95%. Source: Dealogic opportunities emerge. “Any deal And Koch Petroleo do Brasil has that gets done in this environment hired energy-focused investment is one that has to happen,” says Varoli. In most other cases, bank Tristone Capital to seek proposals for the divestiture of buyers will look to find a way out of paying for an asset at old the corporation as a whole or in parts. The company, which valuations. has long-term contracts in place to sell oil to Petrobras, has onshore operations at the Potiguar Basin on Brazil’s northeastern coast and at the Espírito Santo Basin on the southeastern coast. LF Several high profile transactions have fallen victim to foul market conditions in the region. Among those initiated, but not completed are Votorantim’s acquisition of a 28% stake in UPDATE > Aracruz belonging to the Lorentzen Group. The deal was For daily M&A news see www.latinfinance.com officially put on ice mid-October, when VCP management told Bubble Bursts CSN Agrees on Namisa Scrap Litters Landscape 14 LATINFINANCE November 2008

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Latin Finance - November 2008

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