Mergers & Acquisitions in Brazil December … · Mergers & Acquisitions in Brazil . Selected cases, is not an exhaustive list. Not necessarily represent the largest announced transactions,

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December 2012

Mergers & Acquisitions in Brazil

In line with the market’s expectations throughout the year, 2012 saw a total of 770 announced transactions, an increase of 2.5% compared to 2011


2

395 337

415 389

573

722 645 644

799 751 770

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Jan - Dec

Average of 384 transactions announced p.a.



N.B. Transactions disclosed in the press. Does not include e.g. agreements or statements of intent

December 2012

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nov/

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jan/

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/11

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/201

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Transactions

Although transaction volume did not reach the record levels of 2010, 2012 saw some one-off events in the Brazilian M&A market, such as changes to the threshold for antitrust referrals to CADE ( the “Conselho Administrativo de Defesa Econômica”) in May, which lifted M&A activity in the preceding months, as transactions sought to close before the regulatory changes. May therefore saw 88 transactions announced, the second highest monthly volume on record (the record being in December 2010, with 95). The European economic crisis also contributed to a reduction in global investment flows and many industrialized countries went into recession. Even in this environment, Brazil remained attractive in the international market, and was competitive compared to traditional M&A markets, consolidating its status of a secure country to hold investments.

Announced transactions (2009-2012) Transactions

3

December 2010: 95 transactions

May 2012: 88 transactions

February 2009: 27 transactions

58 60 62 62

88

72 71 62 58 61 57 59

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012

2012 transactions

December 2012


N.B. Transactions disclosed in the press. Does not include e.g. agreements or statements of intent

Of the 770 total announced transactions in 2012, 308 had their values disclosed. The disclosure of information about transactions has consistently increased

N.B. Transactions with values disclosed in the press. Does not include e.g. agreements or statements of intent

Announced transaction values (where value was disclosed) in 2012

US$ 95.3 billion

Buyer Target US$ Bn

InBev Grupo Modelo SAB de CV 20.1

Invepar Infraestrutura / Airport Company South Africa (ACSA)

Cumbica Airport (Guarulhos) 9.4

Itaú Unibanco Redecard 5.6

United Health Group Amil Participações 4.9

BTG Pactual ; Banco Santander Brasil ; Caixa Previdenciária dos Funcionários do Banco do Brasil (Previ) ; EIG Global Energy Partners ; Funcef ; Fundação Petrobrás de Seguridade Social ; Fundação Vale do Rio Doce

Sete Brasil Participações 2.7

Kellogg Company Pringles 2.7

Consórcio Inframérica (Infravix Participações / Corporação América)

Brasília Airport 2.6

TPI - Triunfo Participações e Investimentos / Egis Airport Operation / UTC Participações

Viracopos Airport 2.2

Mubadala Development Company

EBX Group 2.0

Intercement Brasil Cimpor - Cimentos de Portugal SGPS

1.9

57% 43%

Transaction values disclosed in $bn

Top 10 Other

4 December 2012


Transactions up to $ 100 million make up the majority of transactions with values disclosed. There were 212 transactions with this profile, representing 69% of the total

December 2012 5

With a combined total of $ 54.2 billion, the top 10 transactions of the year were larger than normal compared to previous years.


212

80

16

0 50 100 150 200 250

Small transactions (up to $ 100 million)

Midsize transactions ($ 101 million to $ 1 Billion)

Large transactions (Over $ 1 billion)

No. of transactions with value disclosed


54.2 13.3

5.9

3.9

3.1

2.5 2.1 1.6 1.3 1

Top 100 transactions - $ bn

Top 10 11 to 20 21 to 30 31 to 40 41 to 50 51 to 60 61 to 70 71 to 80 81 to 90 91 to 100

Brazil’s Southeast region saw the highest transaction volume, with a 72.6% share

Of the total announced transactions, around 91% of deals occurred in the country (701 transactions)*. The Southeast region remained dominant with 72.6% of announced deals. With tax exemptions and other incentives, regions such as the Northeast and Midwest are new options for domestic and foreign investors, giving rise to expansion in other regions of the country, emphasizing multiregional economic activity.

Region

Transactions announced by region

GDP participation

(IBGE)

Southeast 55.4%

South 16.5%

Northeast 13.5%

Midwest 9.3%

North 5.3%

Northeast

1.8 %

North

Midwest

South

3.9 %

12 %

9.3 %

SP 55.6%

RJ 10.6 %

MG 4.8%

ES 1.6%

13

27

65

84

511

December 2012 6


Increase of 3 percentage points compared to 2011.

*The remaining 9% of transactions involved Brazilian companies acquiring outside Brazil


With instability in the international sphere, investors maintain focus on the Brazilian market

7

M&A

Brazil

Domestic investors: In 2012, domestic investors remain the most important in terms of transaction volume and were on the buyside in 59% of announced transactions.

Number of deals announced in 2012, by buyer type

Foreign investors: On the buyside in 41% of announced transactions.

With a notable increase in transaction volume, foreign investors maintained their focus on the M&A market in Brazil and signs of the financial crisis appear less pronounced over time, with a 90% increase in deal volume with foreign buyers, compared to the beginning of the global crisis in 2008.

December 2012

395 390 332 405 403 396

182 147 185

269 239 279

2007 2008 2009 2010 2011 2012

Foreign Domestic

37% 41%



69% 73% 64% 60% 63% 59%

31% 27% 36%

40%

Maintaining the trend of the last few years, controlling stake acquisitions were responsible for more than half (55.4%) of the 770 transactions announced in 2012, with 427 deals

8 December 2012

55% 32%

8%

3% 2% <1%

Controlling stake acquisitions

Minority stake acquisitions

Joint ventures

Mergers

Asset deals

Spin-offs



M&A activity in Brazil continues to be multi sectoral and consolidatory

9 December 2012



13%

10%

8%

8%

7% 7% 5% 4%

38%

IT Retail (Petro) Chemicals Private Services Public Services Food Banking Mining Other

34

42

47

61

66

52

64

79

33

64

40

52

52

64

77

96

Mining

Private Services

Banking

Food

Public Services

(Petro) Chemicals

Retail

IT

2012

2011

Private Equity

10 December 2012

108 129

193

331 310

289

2007 2008 2009 2010 2011 2012

Number of PE deals

Financial investors maintained a significant share of transaction volume 2012, with 289 announced deals in the year.

37.5% The share of financial investors (Private Equity) in Brazilian M&A activities in 2012.

43

55

43

53 45

28 21 21

40 33

38 37

Private Equity share of transaction volume - 2012

%



• Tarpon Investimentos purchased, for an undisclosed value, 7.23% of the common shares of Cremer SA;

• Alupar bought, for R$ 7.16 million, preferred shares of its subsidiary Usina Paulista Lavrinas de Energia;

• Bourbon Hotel Group, along with the building administrator Goincorp formed a joint venture;

• Aliansce acquired, for R$ 65 million, a 25% stake of the West Plaza shopping;

• BR Malls bought, for R$ 180 million, Capim Dourado mall;

• Itaú Unibanco bought, for R$ 11.3 billion, a majority stake in financial company Redecard;

• General Brands announced the acquisition of the remaining chocolate company Divine Sapore;

• Veratis announced the merger of its operations with Tornatti;

• Patria Investimentos bought, for an undisclosed sum, a majority stake in MDT;

• The Localweb company bought a minority stake in Evential;

• Eike Batista bought 4% in the Canadian mining Ivanplants;

Selected cases, is not an exhaustive list. Not necessarily represent the largest announced transactions, but a combined approach of relevance and size of the transaction announced. Some transactions are subject to review and approval by regulators.

• The Celulone Irani bought Indústria de Papel e Papelão São Roberto;

• The American company Copart bought the brazilian Central de Leilões;

• The Rocket Internet made a contribution in the amount of R$ 20 million in online retailer of children's items Tricae;

• The Minerva company bought for $ 15 million, an additional stake in joint venture Minerva Dawn-Farms;

• The website Peixe Urbano sold its operations in Argentina to one of your local competitors, the website Agrupate;

• Localweb, a Brazilian website host and IT solutions head squared in São Paulo, bought stake in the startup Tray E-Commerce;

• OGX bought for $ 270 million, 40% of the drilling block BS-4, sold by Petrobras;

• BR Properties bought logistics and distribution center Anhanguera;

• Vigor buy Dairy MB;

• Kinea buy minority stake in Grupo Delfin;

Some examples of transactions executed in 2012

December 2012 11



• The Brazilian pharmaceutical Blau bought, for an undisclosed amount, an interest of 50.98% colombian laboratory Sumimed;

• Goldsztein sold its retail arm, the mall Paseo Zona Sul;

• De Heus and brazilian Nutrifarms signed a joint venture through equity acquisitions;

• The paint manufacturer WEG bought Stardur;

• The canadian mining company Golden Raven struck a deal with O2iron;

• Renosa, sold for R$ 145 million its participation in brazilian Sorocaba Refrescos;

• Soufflet bought a 60% stake in brazilian Malteria do Vale;

• The Private Equity Axxon Group announced the acquisition of 50% of BR Marinas and Marina Verolme companies;

• The Sythex bought a stake in Silt Consultoria e Sistemas;

• Votorantim received the green light to the acquisition of Pedreira Pontiguar;

• The french design consultant Saguez & Partners has entered into a joint venture with Criacittá;

• Imovelweb acquired Imovelpro;

• The BNDES announced the purchase of 9.1% of the brazilian energy company MPX Energia for $ 681.62 million;

• The Megatelecom announced the acquisition of Dial Data;

• Clic Holding bought for a non announced amount, the brazilian Argo;

• Carlyle bought for $ 200 million, 24% stake in the manufacturer of heavy equipment Orguel;

• Teevo, an IT solutions company, bought 40 contracts of Constant;

• Oxiteno announced the acquisition of the American Chemical ICSA for $ 79 million;

• Ultragaz acquired Repsol Gás Brasil for $ 50 million;

• General Shopping Brasil acquired for $ 130 million Shopping Bonsucesso;

• The brazilian Folhamatic sold 75% of its shares to british Sage Group;

• North american Turk Power bought the Zinco do Brasil Mineração;

December 2012 12


Selected cases, is not an exhaustive list. Not necessarily represent the largest announced transactions, but a combined approach of relevance and size of the transaction announced. Some transactions are subject to review and approval by regulators.

• CHS bought 50% of Andali;

• GP Investments purchased two thousand transmission towers;

• NZN buy Superdownloads;

• North american education company Devry acquired brazilian university Faculdade do Vale do Ipojuca;

• Equatorial Energia acquired Centrais Elétricas do Pará (Celpa);

• North american Franklin Templeton made a contribution in the amount of R$ 35 million in Dall;

• The Asian computer maker Lenovo bought for R$ 300 million, Digibras Participações(CCE);

• The investment fund Pátria held the incorporation of management team of MainStay;

• Security firm G4S has bought the British security firm Vanguarda;

• The irish food group Karry food bought for an undisclosed sum, the brazilian Laboratórios Griffith do Brasil;

• Actis Capital made an investment of R$ 135 million in network language teaching CNA;

• Inepar acquired IAP Inepar Administração e Participações for R$ 608.7 million;

Selected cases, is not an exhaustive list. Not necessarily represent the largest announced transactions, but a combined approach of relevance and size of the transaction announced. Some transactions are subject to review and approval by regulators

• The Buscapé company held an investment of undisclosed amount in the startup Shopcliq.it;

• Green Technology made a contribution of R$ 7 million in NeoAssist website;

• The IFC (International Finance Corporation) has made a contribution of U.S. $ 60 million in Canopus;

• Petrobras bought stake in Energética Camaçari Muricy I;

• BR Malls bought 20% of Maceió Shopping;

• Pacific Rubiales Energy bought Karoon Gas Australia's assets;

• Andrade Gutierrez buys 60% of Aratu Óleo e Gás;

• Idea.me, specializing in collective financial projects disclosure bought, for an undisclosed amount, its brazilian competitor Movere;

• Straumann has acquired 49% of the brazilian Neodent for $ 277 million;

• Coteminas announced a capital increase of R$ 169 million in its subsidiary Springs Global;

• BR Properties closed a deal with M&C Consultoria Empresarial;

• The Barclays Bank acquired shares issued by Daycoval Bank;


December 2012 13


• The Portonaus acquired 91% of Moss Serviços Portuários;

• Syncroparts signed joint venture with Twice Investmentos;

• Brasil Brokers announced the acquisition of 65% of Miranda Imobiliária for $ 6.6 million;

• Fibria Cellulose announced the sale of two farms in Rio Grande do Sul for $ 14 million;

• Petros has increased its stake in Dasa;

• Cemig acquired 40% of Gás Brasiliano;

• The Rede 106 was incorporated by DM9DDB to the Grupo ABC;

• Merger between IOB and Folhamatic;

• The germany Symrise acquired the brazilian operations of Belmay;

• Frutarom announced the acquisition of Mylner for $ 27.1 million;

• Alfa Realty and MDL Realty announced Joint Venture;

• The Uol Diveo bought Solvo;

• Light bought 51% of Guanhães Enegia by $ 25 million;

• The IMI bought InterAtiva for $ 35 million;

• BlackRock acquired shares of MRV;

• Heilind Electronics bought Kotek Eletro Eletrônica;

• The LibertyMedia group bought 5.1% of Ideiasnet for $ 10 million;

• The chinese Lifan and Effa group announced a joint venture;

• The Emporium Vertex announced the acquisition of Cia dos Livros;

• Cromex held Resinet to merge their operations;

• The Brookfield sold 50% of Itaú Power Shopping;

• The Estapar bought Brascan OpenMall;

• The chinese group Sinochem signed an agreement with french Perenco for the acquisition of 10% stake in five exploration blocks of natural gas and oil in the bowl of the Espírito Santo state;

• The north american Devry announced the acquisition of Faculdade Boa Viagem;

• The pharmaceutical Cristália acquired Sanobiol;

• SirvaWorldwide bought ConceptMobility Services;

• Howden Broking Group has bought, for an amount not announced, 51% of brazilian Conset Seguros.

Selected cases, is not an exhaustive list. Not necessarily represent the largest announced transactions, but a combined approach of relevance and size of the transaction announced. Some transactions are subject to review and approval by regulators


December 2012 14


Glossary Definitions applied in this report categorizing a transaction

December 2012 15

Acquisitions are those transactions in which the buyer took control of the target company (i.e. more than 50% of the shares), took on additional shares, or any other transaction in which it is implied that control was transferred to the buyer.

Minority are those in which the control of the company was not transferred among with the shares. These are transactions involving less then 50% of the target’s share capital.

Joint venture is a transaction where two or more partners start a new company together, separate from their existing, independent operations (N.B. not necessarily 50/50). It is different from a commercial agreement, where there a new entity is not incorporated.

Merger is when two companies join their operations and start a third company (incorporating their existing activities and operations into the new entity).

Asset deals are where a company absorbs the operations of another without acquiring the legal entity.

Spin off is a type of transaction where a business is divided from the company it belongs to, into a new legal entity. It happens when companies want to split their business group into independent businesses.

. © 2013 Pricewaterhousecoopers Corporate Finance & Recovery Ltda. All rights reserved. In this document, “PwC” refers to Pricewaterhousecoopers Corporate Finance & Recovery Ltda., which is a member firm of PricewaterhouseCoopers, each member firm of which is a separate legal entity.

“PwC” refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any way.

Alexandre Pierantoni Corporate Finance Partner & Private Equity Leader [email protected] + 55 11 3674 3990

Rogério Gollo Corporate Finance Partner & Deals Leader [email protected] + 55 11 3674 2333

Leonardo Dell’Oso Transaction Services Leader [email protected] + 55 11 3674 3522

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Mergers & Acquisitions in Brazil December … · Mergers & Acquisitions in Brazil . Selected cases, is not an exhaustive list. Not necessarily represent the largest announced transactions,