Latin Finance - October 2008 - 8

M&A (BRP). Once concluded, Company will become a full subsidiary of BRP and its credit strength will benefit from a stronger Bids came in for Namisa, CSN’s iron ore mining complex, but there shareholding, capital and business structure, lower leverage ratios are doubts whether the owner will part with the asset at valuations and better operational ratios, says Fitch. “This merger will eliminate the liquidity discount [for both which are much lower than it was expecting. Analysts estimate it is companies] which should lead to significant appreciation [in the worth $5-$8 billion, well below the up to $11 billion CSN wanted. shares,]” says Nick Reade, CEO of BRP. Shares of both Company Bankers away from the process say the highest bid was some $8.5 and BRP have been trading at heavy billion. discounts to net asset value over the A Japanese consortium including M&A Rank by Volume, Year to September 15 past several months as investors fled Nippon Steel, Itochu and Mitsubishi, UBS advances to top five advised by JPMorgan, was heard stocks with low liquidity. presenting a strong offer. Chinese The transaction should be Rank Advisor Value $m # deals steelmaker Shangang Group is also formalized by October 22 and involves 1 Credit Suisse 37,285.98 27 heard looking at the asset, though its a 200 million reais payment by BRP to 2 Rothschild 19,666.47 17 bid could be losing traction because of Company shareholders, in addition to 3 Citi 17,566.41 17 slow decision making. Severstal, the new shares. BRP will use 100 million 4 JPMorgan 17,446.46 20 Russian group, is also apparently reais in cash, while the remaining 100 5 UBS 14,581.54 23 participating. million reais will come from Company 6 Morgan Stanley 14,564.25 13 CSN CEO Benjamin Steinbruch is dividends. 7 Goldman Sachs 11,801.91 7 known for having walked away from Meanwhile, Lojas Renner, the 8 Banco Itaú 10,749.32 3 offers he claims do not fully value his Brazilian department store chain, is 9 Banco Bradesco 9,781.03 5 assets. Goldman is advising the paying 670 million reais for its rival 10 Lazard 3,286.68 4 steelmaker. Leader. Renner agreed to buy 100% of Subtotal 63,920.07 91 the shares for an initial payment of 440 Total 97,701.77 892 million reais. Source: Dealogic The auction of Minera Autlán was heard gaining momentum, with a number of large strategic bidders Brazil’s Votorantim Celulose e Papel M&A Rank by Fees, Year to September 15 apparently readying offers. Brazilian (VCP) has agreed to acquire a 28% CS breaks $100 million barrier mining giant Vale is understood to be stake it does not own of Aracruz, Rank Advisor Revenue $m % Share among foreign parties interested in paving the way to the creation of one 1 Credit Suisse 101.50 23.84 scooping up the Mexican manganese of the top two paper and pulp 2 Citi 68.78 16.16 and ferroalloys producer. It is companies in the country, alongside 3 Rothschild 41.03 9.64 competing with global steel and mining Suzano. Grupo Votorantim, VCP’s 4 UBS 28.90 6.79 players including Eramet, BHP Billiton, parent, and Grupo Safra, a financial 5 Goldman Sachs 27.69 6.50 Tenaris, Citic and Glencore, according investor in Aracruz, will jointly 6 JPMorgan 25.33 5.95 to executives away from the seller. control shares in the new company 7 Banco Itaú 19.34 4.54 Vale has a substantial M&A cash with a 50% stake, while VCP will own 8 Merrill Lynch 15.37 3.61 the rest. warchest and may seek to extend its 9 Morgan Stanley 14.67 3.45 Elsewhere, Magnesita Refrataríos dominance in manganese beyond its Total 425.77 100.00 already abundant supplies in Brazil, agreed to buy German peer LWB say analysts. Autlán presents some Refractories from private equity firm Source: Dealogic interesting synergies, including the Rhone Capital for €277 million in chance to mix Vale’s high-grade cash and stock. Magnesita plans to manganese with Autlán’s low-grade output to produce ferroalloys. use €50 million cash and a loan of about €330 million from The price of manganese has soared in recent months thanks to JPMorgan, its advisor on the deal, to refinance LWB debt. high demand from steel producers. Autlán’s market cap stood at And Brazil’s Hypermarcas has agreed to buy cosmetics $2.03 billion mid-September, which suggests it could go for over maker Niasi Industria de Cosmeticos for 366 million reais. The $2.40 billion if a buyer agrees to a 20% premium, in line with owner of several consumer products brands will pay 233 competitive auctions. million reais cash, assume 40 million reais in debt and pay the Bids were due by the end of September. Autlán’s adviser remaining 93 million reais within five years. Banco Safra Lehman filed for bankruptcy last month. advised Niasi. LF Namisa Valuation Slides Autlán Momentum Builds VCP Gets Aracruz Company Positive on Brascan Buy Fitch put the B+ rating of Brazil’s Company on rating watch positive following its acquisition by Brascan Residential Properties UPDATE For daily M&A news see www.latinfinance.com 8 LATINFINANCE October 2008

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Latin Finance - October 2008

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