Latin Finance - May/June 2010 - 10

M&A

China Drives Volume

its assets, says a person with knowledge of the deal. Xstrata, which acquired Prodeco from Glencore about a year earlier for $2 billion, says the transaction will provide it with “a Latin America has seen the largest increase globally in targeted robust cash return on the initial purchase price.” Rothschild was M&A volume between the ﬁrst quarter of 2009 and the ﬁrst the target’s ﬁnancial advisor. Morgan Stanley and Credit Suisse quarter of 2010, according to Dealogic. It says volume reached advised Glencore. $74.6 billion in Q1, up 292% from the $19.0 billion of the And Vale agreed to sell a 35% stake in its Bayóvar project in corresponding period of last year. LatAm beat North Asia, with Peru to US-based phosphate and potash producer Mosaic for a 205% increase to $96.0 billion from $31.5 billion, as well $385 million, as well as a 25% share to Japan’s Mitsui for $275 as Southeast Asia, which jumped to $20.2 billion from $8.2 million. A Vale spokeswoman says the buyers are paying cash for billion. the stakes. Dealogic says telecoms was the leading sector, with $33.0 Vale will retain 51% of the controlling stock and 40% of the billion in volume, almost half of it from LatAm. Mexico was total capital in Bayóvar. Bayóvar is a phosphate rock project. the most targeted region in LatAm with $40.4 billion, followed It consists of an open-pit mine expected to have production by Brazil with $19.8 billion, notes Dealogic. Out of the $74.6 capacity of 3.9 million metric tons per year and a maritime billion LatAm targeted volume, $45.4 billion was pursued by terminal. LatAm acquirers, it adds. The trend is São Paulo-based miner Steel likely to continue, thanks to Chinese do Brasil has meanwhile agreed to M&A Rank* by Volume, Year to April 16 investor interest in the region. Credit Suisse leads the way acquire a minimum of 70% in iron CNOOC, China’s largest o shore ore miner Mhag Serviços e Mineração Rank Advisor Value $m # deals crude oil and natural gas producer, for $245 million. Collingham 1 Credit Suisse 17,122.22 8 is paying approximately $3.1 billion Participações will continue to hold 2 JPMorgan 14,567.05 11 cash for a 50% stake in a joint venture a maximum of 30% after the deal 3 Rothschild 11,307.83 7 with Argentina’s Bridas Energy closes. Steel will also acquire at least 4 Citi 9,585.72 5 Holdings (BEH). Bridas, through 80% of the 5.0 billion tons of iron ore a liates including a 40% interest in produced by Mineração Minas Bahia’s 5 Deutsche Bank 8,907.71 7 Pan American Energy, has oil and gas Jiboia project and form a joint venture 6 Morgan Stanley 7,930.73 4 exploration and production activities in with this company. 7 Allen & Co 7,628.42 1 Argentina, Bolivia and Chile. CNOOC Mhag will pay $190 million for the 8 BofA-Merrill 2,398.26 4 wants to expand its reach into LatAm. latter transactions. Steel says it will 9 RBS 2,250.00 1 “Bridas, with a world-class oil “signiﬁcantly increase its capital” to 10 Celﬁn Capital 1,957.15 4 and gas asset portfolio, is a very conclude these deals and ﬁnance its Subtotal 38,979.76 33 good beachhead for us to enter Latin business activities for the next two Total 50,917.20 365 America,” says CNOOC president Yang years. * Acquiror, target or divestor is Latin American / Carribean Hua. “Through this transaction, we’ll Elsewhere, Canada’s Medoro establish a fair presence in this region, Resources is buying Colombian assets which will further enable the company’s production and reserve from Frontino Gold Mines for $200 million. Medoro will assume growth in the future.” CNOOC expects the deal to boost proven all of Frontino’s pension and other liabilities. Medoro has also reserves and average daily production by 318 million barrels of entered into an agreement in principle to sell a 50% stake in oil equivalent (BOE) and 46,000 BOE, respectively. the assets to a company controlled by Seraﬁno Iacono and “BEH is one of the foremost companies in Argentina and a associates. pioneer in the oil and gas industry,” says CNOOC chairman and John Hick, president and CEO of Medoro says the company CEO Fu Chengyu. The transaction will be funded by CNOOC’s will seek ﬁnancing for the deal in July or August, after it closes. own internal resources. Medoro’s ﬁnancial advisor is GMP Securities. Elsewhere, another Chinese buyer, mineral and energy In Chile, the remaining 3.3% of LAN airlines that was exploration company East China Mineral Exploration & previously owned by investment vehicles controlled by president Development Bureau, is acquiring 100% of Brazil-based iron Sebastián Piñera was sold in the local stock exchange at 9,221 ore mining company Itaminas Comercio de Minérios for $1.22 pesos per share, raising a total of 104.3 billion pesos ($195.8 billion in cash. The seller is private investor Bernardo de Mello. million). Singapore’s Temasek Holdings acquired a 1.18% stake. Celfín Capital handled the sale. Piñera had promised during the presidential campaign that he would divest his stake in LAN, It is not only China that is eyeing LatAm assets. Swiss which originally stood at about 26%. LF commodities trader Glencore is exercising an option to repurchase Colombia-based coal company Prodeco from Swiss miner Xstrata for $2.25 billion in cash plus proﬁts accumulated UPDATE > during the option period, which ran for about a year through For breaking M&A news, see www.latinﬁnance.com March 4. To pay for Prodeco, Glencore will seek to sell some of

Mining and Minerals Churn

10 LATINFINANCE

May/June 2010

http://www.latinfinance.com

Latin Finance - May/June 2010

Table of Contents for the Digital Edition of Latin Finance - May/June 2010