Latin Finance - July/August 2010 - 8

M&A

Vale Takes Risk

Large mining companies are on a roll buying up smaller players and the trend is expected to continue. “The treasuries of the senior and mid-sized producers have grown quite markedly and they are at a deﬁnite advantage over the junior explorers and producers,” says Rob McEwen, CEO of Minera Andes, a Canadian Santander is buying back from Bank of America Merrill Lynch miner with operations in Argentina. McEwen expects more ﬂow (BAML) a 24.9% stake in Santander Mexico for $2.5 billion cash. as larger companies try to boost growth through acquisition. BAML paid approximately $1.6 billion cash for the stake in late Mining companies are taking on 2002 and said it had a book value of $2.7 more risky acquisitions in countries not M&A Rank by Volume, Year to June 11 billion at the end of March. Citi joins top three viewed as investor-friendly to get their BAML also sold its stake in Brazil’s hands on prime assets, according to Itaú to raise $3.9bn, about 11% less Rank Advisor Value $m # deals Bernd Drouven, CEO of German copper than the $4.4 billion initially expected 1 Credit Suisse 25,298.00 13 producer Aurubis. This includes Brazil’s following a slump in the stock price, but 2 JPMorgan 19,344.87 16 Vale, which is expanding into Africa. a 37% gain over a four-year investment 3 Citi 14,580.72 7 Its acquisition of seized Guinea iron period. The exit of BAML will make 4 BofA Merrill 14,312.04 10 ore assets for $2.5 billion in cash is no di erence to the Brazilian bank’s 5 Santander 11,673.18 12 seen by some analysts as a risky move, strategy, according to its CEO. 6 Rothschild 11,307.83 8 though it could end up being very “We didn’t really have the lucrative. Vale gets a 51% stake in BSG opportunity to develop a great 7 Deutsche Bank 8,907.71 10 Resources Guinea, which indirectly relationship, the time was too short 8 Morgan Stanley 7,930.73 5 holds iron ore concession rights in order to become really a strategic 9 Allen & Co 7,628.42 1 and exploration permits. The assets partner,” Itaú CEO Roberto Setubal 10 UBS 4,537.05 7 were once owned by Rio Tinto, but tells LatinFinance. BAML acquired the Subtotal 68,037.99 62 conﬁscated by the Guinea government holding in May 2006 when Itaú swapped Total 89,985.84 595 and given to BSG. $2.85 billion in equity for BankBoston’s Source: Dealogic Vale also sold a 30% stake of Brazil, Chile and Uruguay assets. Vale Oman Pelletizing Company for $125 million to Oman Oil. And it sold M&A Rank by Fees, Year to June 11 Deutsche shines by revenue China’s state-owned Sinochem Group is majority stakes in Brazil’s Albras, paying $3.07 billion in cash to Norway’s Alunorte and Companhia de Alumina Rank Bookrunner Revenue $m % Share Statoil for a 40% stake in the Peregrino do Pará to Norway’s Hydro for $405 1 Credit Suisse 27.22 11.30 oilﬁeld, located in Brazil’s Campos million in cash and common shares. 2 Deutsche Bank 25.66 10.66 basin. China’s CNOOC was the other After a $1.75 billion Hydro rights 3 BofA Merrill 23.49 9.76 bidder, according to a Beijing-based issue, Vale will own 22% of the latter’s 4 JPMorgan 17.93 7.45 source familiar with the process. The capital. Citi, DnB NOR and BNP 5 Rothschild 17.93 7.44 divestment of a 40% share of Peregrino Paribas are underwriting the rights will reduce Statoil’s equity production issue, which should be completed this Subtotal 112.23 46.61 guiding for 2012 by 40,000 barrels of month. In addition, Hydro will assume Total 240.80 100.0 oil equivalent per day (boepd) to a range net debt of $700 million. Source: Dealogic of 2.06 million-2.16 million boepd. Elsewhere, Goldcorp sold its gold Je ries advised the seller. and silver San Dimas mine in Mexico In deals between LatAm companies, Chilean energy company to Mala Noche Resources for 500 million Canadian dollars, Copec acquired 100% of AEI Colombia for $240 million in of which it will receive 275 million in cash, 175 million in cash. The buy also gives it control of a 47% stake in Proenergía Mala Noche common shares and a 50 million Canadian dollar Internacional, the parent of fuel company Terpel. promissory note payable over ﬁve years bearing an interest rate Also, Venezuela’s PDVSA ﬁnally acquired a 49% stake in of 6% per year. Goldcorp, which says it will redeploy proceeds Dominican reﬁnery Reﬁdomsa. Dominican ﬁnance minister into funding growth without diluting shareholders, will own about 30% of Mala Noche after the transaction closes. Goldcorp’s Vicente Bengoa says PDVSA will pay the equivalent of $131.5 legal advisors are Cassels Brock & Blackwell and Lawson Lundell. million for the reﬁnery, to be covered mostly by oil supply and paying down some of the country’s debt to Venezuela. LF A fairness opinion was given by CIBC. Goldcorp also sold its Guatemalan Escobal silver project to Tahoe Resources for 505 million Canadian dollars. The price UPDATE > for the project includes a minimum of 230 million Canadian For breaking M&A news, see www.latinﬁnance.com dollars in cash and 40% of the fully diluted Tahoe shares issued

through an early June IPO. Even investment ﬁrms are participating in mining. UK-based investment ﬁrm BlackRock has acquired a 5.1% stake, or 50.3 million shares, in Chilean copper miner Antofagasta, for $771 million, according to a regulatory ﬁling.

BAML Divests Mexico, Brazil

Oil M&A Churns

8 LATINFINANCE

July/August 2010

http://www.latinfinance.com

Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010