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Brasil Insurance to buy Omega for USD 6.4m in cash and stock 

Brasil Insurance Participacoes e Administracao (BRIN3: BZ), the Brazilian listed insurance broker, has announced that, in line with its strategy of growth through acquisitions of interest in insurance and reinsurance brokerages, signed an agreement on 13 May, 2013 acquiring the control Omega Corretora de Seguros, the 47th acquisition made by Brasil Insurance.

Omega, based in Sao Paulo - SP, is a brokerage firm specialized in Benefits and has an outstanding performance with corporate clients, especially in health and dental insurance, with a current portfolio of approximately seven thousand lives. In addition, Omega also has been showing expressive results in retail market with travel insurance, using an insurance trading platform on the internet. Omega position on a product of largest rise in the insurance market in Brazil, generated a portfolio of more than two thousand customers in only one year of operation. The brokerage currently manages approximately BRL 20m in annual insurance premiums.

The total acquisition price is estimated at BRL 13m (USD 6.4m), of which 40% will be paid in cash and 60% in Brasil Insurance stock. The initial payment installment will be BRL 2.9m followed by four variable annual installment calculated using an earn-out structure based on the broker‘s future results. With this, Brasil Insurance will hold 99.80% of the shares representing the capital stock of Omega.

Brasil Insurance, since its IPO, invested a total of BRL 375m, including earn-outs estimated to be paid, in the acquisition of 12 insurance brokers in 2011 (BRL 192m), eight in 2012 (BRL 170m) and one in 2013 (BRL 13m).

Pursuant to Article 256, item I of Brazilian Corporation Law (Law 6,404/1976), the company will present this acquisition to shareholders through an Extraordinary Shareholders‘ Meeting to resolve on this matter. Shareholders dissenting from the acquisition of Omega will have the right to withdraw from the company, based on financial information of 31 December, 2012, calculated at a price of BRL 5.42.

Withdrawal rights will be granted to dissenting shareholders based on a record date of 13 May, 2013 (included). Dissenting shareholders must notify the company of their decision to dissent and withdraw within thirty days from the date of the Extraordinary Shareholders‘ Meeting decision on the aforementioned acquisition. Value USD 6m (deal value) Stake Value 100%. 

Source Company Press Release(s).

OGX may need USD 1bn to repay debt and fulfill investment plan

OGX Petroleo e Gas Participacoes (Bovespa: OGXP3), a Brazilian oil and natural gas startup controlled by Eike Batista, may need USD 1bn in cash. The current cash generation of OGX isn’t sufficient to pay for investments and make debt repayments, Diario Comercio Industria & Servicos reported on Monday citing unidentified analysts at JP Morgan.

OGX has sufficient cash for a period of from two to four quarters, DCI reported, citing a team of analysts at Bank of America Merrill Lynch for the estimate.

The report didn’t give a time frame for when OGX needs the USD 1bn.

Petronas, the Malaysian state oil company, agreed to acquire OGX’s interest in two offshore blocks in Brazil’s Campos Basin, according to DCI. Petronas Brasil, the Brazilian unit of the Malaysian company, under an agreement signed on 7 May, will acquire 40% of OGX’s interest respectively in blocks BM-C-39 and BM-C-40 for a total payment of USD 850m, as reported. Only USD 250m, though, is immediately available to the Brazilian company, DCI reported, citing the Asian company.

The sale of the 40% stake in the two blocks 95 kilometers offshore Rio de Janeiro state, the Tubarao Martelo field, isn’t sufficient to chase away the fears on the ability of OGX to overcome its complex problems, Valor Economico reported Monday in its fourth section focused on in individual investors. The shares of OGX plunged 85% for the 12 months ended 30 April, Valor reported. The issue, though, rose 3.1% to close at BRL 1.68 after 21,394 trades on the Sao Paulo Stock Exchange Monday. The benchmark Bovespa index fell 1.2% to close at 54.447 points.

Batista, the controlling shareholder of OGX, may have to put USD 1bn into the company in order for it to participate in the 11th round of auctions of areas for oil and natural gas exploration in the country, O Globo reported Saturday.

After five years without an auction, a total of 64 companies from 21 countries have qualified to bid in the auctions, set for Tuesday and Wednesday (14-15 May) in Rio de Janeiro, O Globo reported Sunday. The auctions are organized by Brazil’s natural petroleum agency known as ANP.

A total of 289 blocks will be offered in 11 Brazilian states, according to the O Globo report Sunday, which cited ANP for the information.

If all the blocks, which are offshore and on land, were auctioned at the minimum price, a total of BRL 627m (USD 312m) would be raised from the ANP auctions this week, according to O Globo. The most optimistic scenario estimates that up to BRL 3.7bn (USD 1.8bn) may be raised from the auction of the concessions, according to the newspaper. Value USD 1,000m (reported sum of cash needed by OGX). 

Source DCI Diario Comercio Industria & Servicos, Valor Economico, O Globo.

Grupo GTXE seeks smaller heavy equipment parts distributors, could sell stake to fund deal, COO says

GTXE Negocios e Participacoes, a closely held Brazil-based tractors and heavy equipment parts distributor, is interested in acquiring smaller competitors to expand its footprint, said Marcelo Terra, COO and shareholder.

The company would like to acquire competitors for their client portfolios, especially in the growing West-Central region of Brazil, Terra said. The plan is to actively pursue acquisitions in 2014 and 2015, but they could happen earlier if a good opportunity arises, the COO added.

GTXE had USD 80m in revenues in 2012, employs 150 people and has clients in the agribusiness, industrial logistics and mining sectors, Terra said. It is headquartered in Sao Paulo and has an office in Santos, where Brazil's largest port is located.

The company does not have M&A advisors and would hire one when it engages in talks, Terra said. GTXE works with some Brazilian law firms but they are not focused on M&A, he added.

GTXE plans to finance acquisitions with its cash flow and could take a loan from the state-owned development bank BNDES, Terra said. However, depending on the deal value, the company could consider a stake sale to finance buys, the COO added. It would be “more interesting” to sell a stake to a strategic bidder that brings a good forward-looking strategic perspective and strengthens its footprint in Brazil, than to a financial bidder, he added.

GTXE was founded in 1995 by Terra and Marcelo Vieira. Each one has a 50% stake. It has four subsidiaries: Encopel, which distributes axle differentials and transmission parts from the Italian manufacturer Carrara; Encopart, specialized in parts for Caterpillar tractors and heavy construction equipment; Triex, a parts importer and distributor of manufacturers like Dana, Huber Warco and Komatsu Dresser; and Triex Locadora, which rents tractors, forklifts and wheel loaders from Caterpillar and New Holland.

The company was approached in 2012 by an undisclosed Brazilian private equity firm but the shareholders declined to engage in stake sale talks, because they did not like the bidder’s philosophy, Terra said. “A [financial] partner focuses on short-term profits,” the COO explained.

Although a stake sale to a financial bidder is not top priority, GTXE would not refuse to engage in talks with one, Terra said. Value USD 80m (Revenues in 2012).

Source Proprietary Intelligence.

Mitsui & Co to acquire 20% stake in owner of Jirau Hydropower project from GDF Suez 

Mitsui & Co announced on 13 May 2013 it will acquire a 20% stake in Brazil-based owner of the Jirau Hydropower project from GDF Suez.

Mitsui & Co ("Mitsui", Head Office: Tokyo, President & CEO: Masami Iijima) has agreed with GDF SUEZ Energy Latin America Participações ("GSELA"), subsidiary of the global energy group GDF SUEZ ("GDF SUEZ"), to participate in 3,750MW Jirau run-of-the river hydropower project ("Project"). Mitsui, through its Brazilian subsidiary to be newly established, will acquire 20% equity of ESBR Participações ("ESBRP"), which owns the Project. Capital expenditure of the Project is estimated approximately BRL 16bn (JPY800bn, USD 7.9bn) as of December 2012.

The Project is to construct and operate the Jirau Hydropower Plant, which is located on the Madeira River in the State of Rondônia in northern Brazil, and sell electricity mainly to electric power distributors based on long-term power purchase agreements for 30 years. Its total generation capacity of 3,750 MW will make the Project the fourth largest hydropower plant in Brazil. A loan agreement on a project finance basis has already been executed with BNDES (Brazilian Development Bank) and a group of commercial banks, and both the operational license and environmental license have been already granted. Full commercial operation with all 50 turbines is expected to start in 2015.

The transaction further expands the long-term partnership between Mitsui and GDF SUEZ, following a successful track record of joint investment and cooperation, including projects in Canada, Europe, Middle East & Africa, Asia and Australia. The Jirau transaction represents an extension of this partnership to Latin America, and a joint strategy of accelerating developments in fast growing markets and expanding their renewable portfolios.

Hydropower does not require fossil fuel and emits almost no greenhouse gases. The Project adopts run-of-the-river type of hydropower, making use of the natural river flow for power generation. The project gives due consideration to the surrounding biodiversity such as installing fish transportation system and relocation of existing vegetation. Hydropower provides base power load amounting to 90% of Brazil's power generation and by participating in Jirau Project, Mitsui will contribute to supporting the growing electricity demand in Brazil.

Mitsui will hold, after its participation in Jirau Project, approximately 6,694MW on an installed net generating capacity basis, including projects under construction. With this Project, hydropower will account for 1,287 MW, or approximately 19% of the abovementioned generating capacity. Mitsui will pursue further investment in power projects in Latin America and other regions with growth potential, aiming to develop a diversified power generation portfolio with a balanced fuel-mix in various geographical locations.

Closing of the transaction is expected to occur during the second half of 2013, upon satisfaction of certain conditions, including obtaining approvals from Brazilian regulatory authorities and lenders of the Project.

The complete release is available here. Value USD 7,900m (estimated capital expenditure of project) Stake Value 20%.  

Source Company Press Release(s).

 

CPFL expects to conclude Rede Energia acquisition by July

CPFL Energia (CPFE: BZ; CPL: NYSE), the listed Brazilian energy company, expects to conclude by July the acquisition of Rede Energia (REDE3, REDE4: BZ), made in partnership with Equatorial Energia (EQTL3: BZ), despite the controversy raised by competitors seeking to block the deal, Valor Economico reported, without citing sources.

Companhia Paranaense de Energia – Copel (CPLE6: BZ) and Energisa (ENGI3: BZ) both complained about the exclusivity awarded to the CPFL-Equatorial consortium and asserted in court their right to also deliver a bid. Copel and Energisa based their arguments on Law 12,767, which deals with intervention in electricity companies, according to which the free participation of interested parties in a possible change of control of a company under intervention should be ensured without the granting of exclusivity to one or more companies, the item noted.

The Brazilian Congress is expected to vote in the coming weeks on an amendment to Law 12,767, according to which the restriction of exclusivity would apply only to seized companies with recovery plans rejected by regulator Aneel. If approved, the amendment will represent a defeat for Copel and Energisa and a victory for Equatorial and CPFL, the item said, citing unnamed sources.

Juliao Coelho, director at Aneel, was cited in the business daily piece as saying he believes the agreement is valid, as the purchase and sale agreement was signed before the entry into force of Law 12,767, which was signed into law on 27 December 2012.

Source Valor Economico.

Ornare plans US expansion, could open more showrooms with private equity investment, CEO says

Ornare Industria de Moveis, a Brazil-based premium furniture manufacturer and retailer, is planning to open local distribution facilities in the US, and could open even more if it sold a stake to a private equity firm, CEO and co-owner Murillo Schattan said.

“We are keen to talk to a fund to grow in the US with investor capital,” Schattan told Mergermarket. The company is not actively seeking investors but welcomes approaches and would hire M&A advisors for a deal, the CEO added.

Ornare has had a showroom in Miami since 2006 and opened the second US-based one in Dallas in late May. The company is opening a master distribution company in the US and aims to open local distribution facilities in Chicago, Los Angeles, New York and Washington DC. Each showroom demands an investment of USD 700,000 and could generate revenues from USD 4m to USD 6m per year, Schattan said.

“It is possible to open up to 10 showrooms on US soil, and it would be easy with an investor that helps with management,” Schattan said. He did not elaborate about the stake size or the amount of capital it would like to raise.

With USD 83m in revenues, Ornare designs, manufactures and markets living room, bedroom, kitchen, office and home theater furniture for high-income consumers. It has an industrial facility in Sao Paulo, where it is headquartered and employs 650 people.

Ornare has ten stores in Brazil, four of its own and the others franchised, and it plans to open seven more franchise locations this year, Schattan said. The company would sell a stake only for international expansion, and not for the Brazilian operation, the CEO added.

Ornare is also negotiating distribution contracts in Canada and Costa Rica, and the markets in Chile and Angola are also on the company’s radar in the short term, Schattan said. The company is also developing a corporate furniture portfolio which is projected to be ready to market by late 2014, the CEO said.

The company was founded in 1987 by Murillo and his wife Esther. They are the only shareholders, with stakes undisclosed. The couple has two sons - Pitter, Ornare’s CFO, and Stefan, who manages other family assets.

The Ornare Miami store is owned by the company and local investor Claudio Faria, who runs the store through a distribution agreement, said Schattan.

Value USD 83m (Revenues in 2012).

Source Proprietary Intelligence. 

Fusion Group looks to expand abroad via acquisitions or JV within 18 months

Looks to acquire or form a JV in the Far, Middle East or Australia 

Could expand further into South America. Grant Thornton advising. Fusion Group, the UK gas, water and electricity infrastructure company, is eyeing an acquisition or a joint venture abroad, Chief Financial Officer Neil Green said. The company is looking to expand its manufacturing facilities in the Far, Middle East or Australia within the next 18 months. Fusion Group is interested in purchasing an existing facility or forming a JV entity with a local partner.

The company is currently exploring opportunities for buys in Vietnam, Malaysia and Indonesia, but would be willing to consider other markets in the region, the CFO said.

Fusion Group is after majority stakes in potential joint ventures, the CFO said, suggesting that they would be looking to own around 60%, although the structure could vary. The ideal target or partner would have access to the local market and be already involved in the utilities sector. The group is also willing to form a partnership with private entrepreneurs.

When conducting JVs the company uses Grant Thornton as advisors and is likely to mandate them on the potential deal.

After expanding in the East or Australia, the company would look at South America, particularly Bolivia, Chile, Brazil and Argentina, Green said.

He did not rule out possible acquisitions in the home market, adding however that they are not looking for targets at the moment.

The company would fund its expansion using a credit line it has opened with Lloyds. The CFO ruled out the possibility of cooperation with a private equity firm despite often being approached, saying they would rather do it on their own.

Some 80% of the company’s products are produced in the UK, and the rest is manufactured in China and Egypt.

In Egypt the company has two JVs with local partners called Fusion Middle East and Ace Plastics in which the group owns 60% and private individuals the remainder.

Fusion Group has two JVs in China as well, one of which is named KEPL located in Kunshan near Shanghai, and in which the group holds a 60% stake and two private individuals the remainder.

The second JV is called GH-Fusion, a 50:50 partnership with local partner Hong Kong and China Gas, a coal gas provider in Hong Kong. GH-Fusion manufactures a range of electro fusion fittings and is located in Zhongshan, Guangdong province. The facility is set to serve Chinese, South-East Asian and Australian markets.

The company also has invested GBP 0.7m in Malaysia and GBP 0.1m in Indonesia in 2012, as well as GBP 3m in Australia over the last three years in distribution and hire facilities.

Fusion Group continues to invest in its wholly owned facilities in Indonesia where it is interested in expanding further, the CFO said, adding that the company's European operations are experiencing stagnation and the company would therefore avoid adding to its EU presence.

Fusion Group posted turnover of GBP 116m for 2012 and expects 12.5% by the end of 2013, according to the CFO. Turnover from the company's core business is expected to have grown by 7% in 2012, when its accounts are finalized, he added. The company’s EBITDA in the financial year at the end of March 2013 stood at GBP 8m. The group’s EBITDA multiple lies in the 7-10 range.

Fusion Group is 60% owned by Eric Bridgstock, 68, the founder and current chairman, and the remaining stake belongs to senior management team comprising Kevin Raine, 52, Neil Green, 47, Steven Hamshaw, 42, and Michael Bailey, 57. The owners have long-term plans to develop the company and retain their stakes, according to Green.

Fusion Group has “significant” market share in the UK, Green claimed without specifying the figure, and adding that since 2008 the company’s market share has grown by 46%. The company will look to increase its market share further.

Besides expanding its overseas presence, the company has a home market growth strategy in place. There are 23 million meters across the UK requiring replacement and where the company is planning to be involved in the supply chain. Additionally, the CFO sees potential in the UK’s privatization of the electricity sector as well as housing development and infrastructure.

Fusion Group competes with Wolseley, a distributor of heating and plumbing products and a B2B supplier of builders’ products. Last year Wolseley acquired Burdens, a distributor of underground drainage and civil engineering materials.

Fusion Group specializes in multi-utility infrastructure products and services. It produces machines and tooling for polyethylene pipe jointing. The group also engages in green energy projects with heat systems, landfill gas, photovoltaic panels and carbon accounting.

The company has fully owned as well as joint venture distribution centres in 20 countries and sells its products in 40. Value USD 178m (Fusion Group's turnover) Stake Value more than 30% inclusive.

Source Proprietary Intelligence. 

 

Grupo Protege acquires Seaviation 

Grupo Protege, a Brazilian closely held group specialized in private security services, has acquired, through its subsidiary Proair, the ground-handling company Seaviation (SEA). The deal amount has not been disclosed.

Mario Baptista de Oliveira, director general at Grupo Protege, said the deal will enable Proair, which operates mainly in aircraft protection segment, to offer more complete services. With the deal, Proair expects to grow 15% annually, Protege said in a press release.

Before the SEA acquisition, Proair operated in 30 airports in Brazil, serving 9,000 flights, and it will now serve more than 20,000 flights in the same airports, the company said.

Source Company Press Release (Translated).

Lemminkainen sells mobile business in Latam, Mexico and US to Blue Skies Networks 
Lemminkäinen and Blue Skies Networks, LLC, an American telecommunications company, have signed a share purchase agreement for all outstanding shares in Lemcon Networks' subsidiaries engaged in mobile telecom network project business in Brazil, Canada, Chile, Colombia, Ecuador, Mexico and the United States. The parties have agreed not to disclose the transaction price.
The transaction will be completed after local authority approvals have been obtained latest during the third quarter this year.
The divested subsidiaries have been part of Lemcon Networks, which is 100% owned by Lemminkäinen Group. Lemcon Networks provides professional project management, implementation services and software solutions for mobile telecom network projects. The divested businesses engage a staff of approximately 340 professionals.
Lemminkäinen specified its strategy in 2011 and stated that it will be focusing on its key strategic growth areas, which are the Nordic infrastructure construction as well as residential construction in the St. Petersburg area in Russia. Lemminkäinen announced the divestment of Lemcon Networks' Asian business on 30 January 2013.
As it was stated on 19 April 2013, Lemminkäinen expects to recognise a loss of about EUR 3m during the second quarter from the divestments. Blue Skies Networks, LLC, an American company is a group of investors, wireless services and technology experts and serial entrepreneurs. The company seeks promising companies to acquire, invest in and/or otherwise support to build successful leaders in the global wireless services and technology space.
According to a report by Talouselama, the target has sales of EUR 20m.
Value USD 26m (target's sales). 
Source Company Press Release(s), Talouselama

BSI bid by Bankinter and Apollo Global greeted skeptically, would not gain FINMA approval
The reported bid by Spain’s Bankinter [BKT SM] and US private equity firm Apollo Global for Banca della Svizzera Italiana (BSI) has been greeted skeptically by Swiss banking sources, Finanz und Wirtschaft reported. Sources close to the situation said Bankinter and Apollo Global submitted a bid for BSI, the Swiss banking unit of Italian Generali. Unnamed industry experts said Bankinter does not have a reputation as a manager of large assets and stated a private equity fund would never gain Swiss Financial Market Supervisory Authority (FINMA) approval to acquire the bank. The paper suggested that speculation of such exotic names as buyers is an indication that in fact the sale is no closer to fruition.  Value USD 2,491m (BSI book value).
Source Finanz und Wirtschaft.