After two months of discreet talks, Itaú Unibanco closed on Thursday (May, 11th) the purchase of 49.9% of the total capital of XP Investimentos for R$ 6.3 Billion, which includes R$ 600 million in resources that the bank will inject into the company. With the transaction, the country’s largest private bank reserves its space in the process of “de-banking” in progress, in which people are leaving traditional banks for brokerage accounts with banking services. “I believe this transaction will take Itaú and other banks out of the comfort zone, as it will strengthen XP and increase its ability to compete in the investment market,” said Roberto Setubal, co-chairman of Itaú Unibanco’s board of directors.
Unilever has rejected a $143 billion merger proposal from Kraft Heinz, the Brazilian-controlled food conglomerate 3G Capital and mega-dealer Warren Buffett, setting the stage for a battle between two of the world’s largest consumer products companies.The Anglo-Dutch company, behind big brands like the Dove soap and the Ben & Jerry ice cream, said the offer of $ 50 per share and new papers – an 18% premium on the closing price on Thursday (16) – “fundamentally undervalues Unilever”.
“Unilever has rejected the proposal because it sees no merit, financial or strategic, for its shareholders. Unilever sees no basis for further discussions,” the statement said.
Kraft Heinz’s approach comes at a sensitive time for the UK, with its politicians and big companies trying to maneuver through the uncertainty generated by the country’s exit from the European Union. The decision to leave the world’s largest trading block caused a fall in pound sterling’s value, which made UK assets significantly cheaper and attractive to the attack by wealthy non-British investors.
Unilever has a complex shareholding structure, with papers listed on the London and Amsterdam stock exchanges.
Kraft Heinz said it had made “a comprehensive proposal for Unilever on combining the two groups to create a leading consumer products company with a mission of long-term growth and sustainable living.”
“Although Unilever has declined the proposal, the company is eager to work out an agreement on the terms of a transaction. There can be no certainty that any other formal proposal will be made to the Unilever board.”
Unilever said Kraft Heinz’s offer consisted of an existing Unilever payout of $ 30.23 in cash and a further 0.222 share of the company resulting from the merger.
Shares of Unilever rose 12.5 percent to 37.59 pounds on Friday, giving the company a market capitalization of 113 billion pounds, which means that any acquisition would be one of the largest in history. Its US-listed stocks rose 10.6% to $ 47.08 in pre-opening trading. It is the fourth largest company in the world of consumer products by sales, with revenue last year of 52.7 billion euros.
Under UK rules on takeovers, Kraft Heinz has until markets close on March 17 to make a firm bid or refrain from making a new bid for Unilever for six months.
This merger would unite some of the top brands in the global consumer industry, adding Dove and Knorr to Kraft Heinz’s list of Philadelphia cream cheese, Heinz ketchup and Weight Watchers.
News of the offer comes a day after Kraft Heinz shares fell nearly 5 percent, the biggest daily drop since the big merger that shaped the company in 2015. The company reported a 3.7 percent drop in quarterly sales Quarter and said it intended to step up cost cutting
Like many other consumer products companies, Unilever has been seeing slowing growth as consumers are not loyal to brands in mature markets and are increasingly turning to start-ups for new products.
Emerging markets account for 58% of Unilever’s sales, more than the industry average, and the company relies heavily on them to grow.
Kraft Heinz was formed in a $ 100 billion deal orchestrated by Buffett and 3G Capital in 2015 and has focused on aggressively reducing costs in the companies it has purchased, with the goal of saving $ 1.7 billion annually by 2018.
Analysts expect further consolidation in the industry and speculate that 3G could strike again, two years after its last big business. Some point to Mondelez International as a possible target.
In January, Unilever chief executive Paul Polman shocked investors by warning of “challenging” conditions in the first half of this year, after a slow 2016.
Unilever reported a 3% increase in pre-tax profit in 2016 to 7.5 billion euros, driven by a reduction in costs and an increase in efficiency that raised basic operating margins by 50 basis points to 15.3% .
Polman warned on the occasion that “difficult market conditions” would only ease in the second half of this year. “We expect a slow start, with improvement as the year progresses,” he said.
The immediate cause of poor performance in the last three months of last year came from India and Brazil: Unilever’s second and third largest markets, respectively, representing 14% of the group’s revenues.
The Dutch multinational Heineken announced on Monday (13) the purchase of Brazil Kirin, controlled by the Japanese group Kirin, for 664 million euros (R$ 2.2 billion). With the acquisition, Heineken becomes the second largest brewery in Brazil. After the conclusion of the deal, Brasil Kirin will be consolidated with Heineken.The transaction evaluates Brazil Kirin at 1.025 billion euros (R $ 3.3 billion), including debt. Brazil Kirin closed 2016 with a revenue of R $ 3.706 billion, against a revenue of R $ 3.698 billion a year earlier, and an operating loss of R $ 262 million, against R $ 322 million in 2015.
Kirin Brazil has 12 factories and its own distribution network. The company has a particularly strong presence in the North and Northeast, where Heineken has less exposure. The beer portfolio, which includes brands such as Schin, Devassa, Baden Baden and Eisenbahn, has a market share of 9.9%. Brazil Kirin also has a line of soft drinks, with a market share of 2% in the category.
Heineken operates five plants in Brazil and distribution is done by Coca-Cola bottlers. The company said it expects significant cost synergies with the acquisition, with efficiency gains in production, logistics optimization and sales, general and administrative expenses.
Completion of the purchase is subject to the approval of the Administrative Council for Economic Defense (Cade).
The Italian company Luxottica, largest company in the world for glasses, will buy Óticas Carol for € 110 million (R$ 368.6 million). The agreement was signed with the partners of the Brazilian company 3i Group, Neuberger Berman and Siguler Guff & Company, and depends on the approval of the Administrative Council of Economic Defense (Cade) to be concluded. Ronaldo Pereira, president of Óticas Carol, said that the request for approval will be sent to Cade in the coming days. The expectation is to complete the purchase this semester.
The acquisition is the first move by the Italian group since the global acquisition two weeks ago of France’s Essilor International for € 46.3 billion. This operation gives rise to the largest global company of glasses and lenses, with market share of 32% in the world and 28.3% in Brazil, according to Euromonitor International.
The purchase of Óticas Carol in Brazil will lead Luxottica to the leadership in the optical market as well. Óticas Carol has 950 stores in operation in the country and closed 2016 with revenues of R$ 813.7 million, a result 21.4% higher than in 2015. Its market share is 2.3%, according to Euromonitor International .
In a statement, the president of Luxottica, Leonardo Del Vecchio, said the company will verticalize its operation in Brazil with the purchase. Overall, Luxottica has 12 optical networks and a total of 7,400 stores in operation on five continents. From January to September 2016, the company’s retail revenue grew 5.7% to € 3.297 billion and accounted for 81% of total revenue. Total revenue in the period rose 0.2% to € 4.085 billion.
In the Brazilian retail market, Luxottica entered in 2011 with the Sunglass Hut network, which reached 100 stores in the country in 2016, being 73 own units and 27 franchises. The goal was to reach 200 units in five years. “Luxottica has a major retail operation in the international market, but faced difficulties in Brazil to grow in this area, due to the complexity of the sector,” Pereira said.
Óticas Carol president added that with the purchase, the retailer gains a more robust structure to carry out its expansion plan. For 2017, Óticas Carol aims to open 175 franchise stores and reach a revenue of R$ 918 million. Pereira said that this goal can be changed in the coming months, depending on the definitions that Luxottica takes on the network.
Asked about the maintenance of two optical retail chains in the country, Luxottica reported that “Óticas Carol has proved to be efficient and effective in the market” and that “it is too early to discuss the future of Sunglass Hut, since the acquisition still needs Be approved by Cade. ”
The Brazilian optical market is very pulverized, with approximately 26 thousand companies in the country, according to the Brazilian Optical Industry Association (Abióptica). In addition to Óticas Carol, Óculos Diniz is among the leaders, with more than 900 stores, followed by Chilli Beans, with just over 700 units. The other networks have less than 100 stores.
For the president of the Abioptica, Bento Alcoforado, the acquisition will have limited effect in the sector. “Even if Óticas Carol opens another 150 stores this year, it will continue with a very small portion of the market,” said Alcoforado. He considers it possible to see new acquisitions in the sector throughout the year, as the Brazilian economy shows signs of improvement. Last year, the sector shrank 17% in revenues, to R$ 16.9 billion.
The deal between Luxottica and Óticas Carol took about a year. As part of the agreement, the contracts of Ronaldo Pereira and the directors of the retailer were renewed for another three years. Luxottica will continue to provide its frames and lenses to other retail chains in addition to Óticas Carol in the country.
JBS S.A. (“JBS” or the “Company”), in a further step towards advancing its planned reorganization, announces that its Board of Directors today unanimously approved the filing of a registration statement with the U.S. Securities and Exchange Commission (“SEC”) of its subsidiary JBS Foods International B.V. (which shall be converted into JBS Foods International N.V.) (“JBSFI”) in connection with its plan to conduct an initial public offering (“IPO”) on the New York Stock Exchange (“NYSE”) for its Class A common shares.JBSFI has its official seat and registered office address in The Netherlands and shall house all of the international businesses of JBS plus Seara. JBS S.A. will continue to manage and control the Brazilian beef business and related activities including leather processing.
Wesley Mendonça Batista will be the Chairman, a non-executive director, of JBS Foods International. The Board of Directors of JBSFI will be composed of nine members, the majority of whom will be independent. Gilberto Tomazoni, who has held senior executive positions at JBS for the past four years, will be the CEO, while Russ Colaco will be CFO. The Company believes that this revised structure and proposed IPO reflects its global production platform, product portfolio and broad international customer base.
The Company expects to complete the IPO during the first half of 2017. The timing, number of Class A common shares and price of the proposed offering have not yet been determined.
This notice does not constitute an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
With regard to this material fact, the management of JBS S.A. will conduct a conference call with analysts and investors tomorrow, December 06, 2016 at 10:00am (BRT) in Portuguese and 12:00pm (BRT) in English
Itaú has agreed to pay R$ 710 million (approximately US$ 220 million) for the retail operations of Citibank in Brazil. The transaction was announced this morning. Citi primarily serves high-income customers and has 315,000 account holders in the country.
In the acquisition, Itaú acquired loan portfolio, credit cards, deposits, asset management, insurance brokerage and the 71 branches that Citi has today in the main regions of the country. That is R$ 35 billion in deposits and assets under management, 1.1 million credit cards issued and a credit portfolio of R$ 6 billion reais. After the acquisition, Itaú Unibanco will have R$ 1.404 trillion in assets.
The acquisition still needs to receive the approval of the Central Bank and CADE (Administrative Council for Economic Defense)
Citibank joins HSBC in retreating from Brazil. HSBC announced at the end of 2015 that it sold its Brazilian operations to Bradesco. In a deal already approved by anti-trust authorities, Bradesco acquired HSBC and brought their assets closer to Itaú, largest private-controlled bank in Brazil, by that metric. HSBC was a lot bigger than Citi in Brazil, but today’s acquisition shows Itaú is not willing to let this largest label go.
Itaú has a 5-star rating from Easy Brazil Investing and continues to be a great way to play the Brazilian economic recovery.
In an operation that creates a global leading company in the refractories market, mainly used in the steel industry, Brazil’s Magnesita, the third largest manufacturer in the world in this sector, merged their businesses to the Austrian giant RHI, based in Vienna. With the merger of assets, it is formed RHI Magnesita, which will have an annual revenue of approximately € 2.7 billion (R $ 9.8 billion).
The new company, which will have dispersed control, in line with the current profile of RHI, will have its shares listed on the London Stock Exchange. The corporate headquarters will be established in the Netherlands and the Austrian company stocks will be de-listed from the Vienna stock exchange.
One immediate consequence of the of the restrictions imposed by CADE is that Bradesco is definitely out of the dispute to acquire Citi in brazil, since no new acquisition will be allowed to the bank for 30 months. On top of that, the bank has to lower the portability costs for HSBC customers that do not want to come under Bradesco.
With the acquisition, Bradesco gets closer to the largest private bank in Brazil (Itaú Unibanco). HSBC has around 2 to 3% of the banking system market share and now Bradesco should reach around 17%.
The EPS should have neutral impact for the first year, since the bank does not plan on issuing new stocks to finance the acquisition and the multiples of the acquisition are in line with Bradesco’s itself. The acquiring bank’s expectation is that the transaction starts to generate value a year after its closure.
Investment firm Blackstone Group LP (BX.N) on Sunday said it is not considering an acquisition of Brazilian shopping mall operator BR Malls Participacoes SA (BRML3.SA), denying a report published early in the day by newspaper O Globo.”We are not actively engaged in acquisition discussions for BR Malls,” Blackstone said in an emailed statement.
The Brazilian newspaper, without citing sources for its information, said early Sunday that Blackstone had hired JP Morgan Chase & Co. (JPM.N) to help it consider acquiring a controlling stake in BR Malls, which is based in Rio and is Brazil’s biggest mall operator.
The paper said the acquisition would amount to Brazil’s biggest-ever real estate transaction and would be valued at as much as 12 billion reais ($3.38 billion).
A spokeswoman for BR Malls, which is based in Rio and is Brazil’s biggest mall operator, declined to comment on the report.
A spokeswoman for JP Morgan Chase also declined to comment.
Brazil’s largest private sector banking group said on Thursday that it had agreed to acquire the distressed debt unit of the troubled investment firm BTG Pactual for about 1.2 billion reais, or about $307 million.The banking group, Itau Unibanco, will acquire 82 percent of the distressed debt unit, Recovery do Brasil Consultoria, for 640 million reais and approximately 70 percent of the firm’s nonperforming loan portfolio for 570 million reais. The portfolios have a face value of 38 billion reais, the bank said in a filing. Both stakes correspond to BTG’s entire ownership of each.
The International Finance Corporation, the World Bank’s private investment arm, will retain its minority stakes in both the firm and the nonperforming loan portfolios.
The price was less than the 1.7 billion reais than BTG had sought, according to multiple people with knowledge of the negotiations. Some in the market thought BTG could have fetched the higher price if it had been more patient. That suggests that BTG continues to face pressure to demonstrate liquidity and good financial health after the arrest of its founder and former chief executive, André Esteves, on Nov. 25.
Mr. Esteves faces charges by Brazil’s attorney general of obstruction of justice and interfering with the broad investigation into corruption involving the state-owned oil giant Petrobras. Although he was released from jail on Dec. 17, he remains under 24-hour house arrest awaiting trial and cannot return to work at BTG. He has resigned as its chief executive and chairman of the board.
BTG’s stock fell by about half in the weeks after his arrest and was still trading near its low at around $15 a share on Thursday.
BTG continues to grapple with turning a corner. In a December research report, Goldman Sachs said that it expected the firm’s cumulative funding gap — as measured by assets versus liabilities — to reach 1.6 billion reais by the end of this year and widen to 11 billon reais by the end of next year.
In a respite, BTG obtained a line of credit of six billion reais this month from the private credit firm Fundo Garantidor de Créditos, which is funded by Brazilian banks.
Yet it continues to be on an aggressive campaign to sell assets, and Recovery was one of its most prized.
“They were putting a lot of pressure to get it done quickly,” one of the individuals with knowledge of the negotiations said of the speed of BTG’s sale of Recovery. That turned off some potential buyers, he said, as BTG “did not want folks to be able to check under the hood” before reaching an agreement.
If BTG had been more patient, that person said, BTG may have fetched as much as two billion reais for Recovery. “There was no reason to push for a close by the end of the year,” he said, other than demonstrating financial health in the calendar year.
Initially, Itau Unibanco was neither BTG’s preferred buyer nor the most likely candidate, according to several people who spoke on the condition of anonymity. BTG was close to reaching a deal this month with the American investment firm Lone Star Funds, according to two people.
Lone Star was widely seen to be the favorite as it had been talking to BTG well before the arrest of Mr. Esteves.
“Lone Star was the pretty obvious buyer from the beginning,” said one of the people, adding that, “I did not think anyone was ahead of them.”
Recovery was particularly attractive to foreign buyers because it allowed them a way to enter Brazil’s lucrative distressed debt market without having to build their own operation here.
Yet talks with Lone Star broke off last week for reasons BTG Pactual has yet to disclose. One individual said the two parties were apart on price by about approximately 300 million reais. Sam Loughlin, Lone Star Funds president of the Americas, did not respond to an email requesting comment.
Before these negotiations, more than 20 firms had expressed interest in Recovery. BTG gave a deadline of Dec. 16 for submitting nonbinding final offers.
Clint Kollar, a managing director with TPG Special Situations Partners, the dedicated credit platform of TPG Capital, met with BTG at its São Paulo headquarters this month, according to one person with knowledge of his plans.
The Fortress Investment Group showed interest until Dec. 16, but was told its bid would be too low, so it backed out. Although Fortress recently closed its macro funds, having faced huge losses in Brazil, according to an article in The Wall Street Journal in October, its credit business, which includes distressed and special situations, continues to have interest in Brazil.
Apollo Global Management had also taken interest in Recovery. Cerberus initially looked at it but balked at a price of more than one billion reais.
The terms of the deal with Itau are subject to regulatory approval.