Banks consolidate in preparation for M&A surge
As Sadia’s attempted takeover of Perdigão indicates, Brazil’s already vibrant M&A market is gathering momentum. Goldman Sachs and UBS are probably the leading advisory firms in the country, and the former’s recent transactions cover a range of complex and innovative deals that go beyond straightforward takeovers.
In December Goldman Sachs advised TCP in a complex restructuring of wireless company Vivo’s public subsidiaries into TCP in the largest M&A transaction in Brazil in 2005; the same month it also advised Wal-Mart on its acquisition of Sonae SGPS’s Brazilian retail business. In January 2006 Goldman was adviser to Embraer in Latin America’s first ever share pulverization, a move that transforms the firm into a publicly traded company with equal rights for all shareholders.
Ricardo Lacerda, formerly of Goldman Sachs and now head of investment banking in Brazil with Citigroup, says: “The Embraer deal was well executed, traded up in the secondary market and is in many ways a case study for other companies in how to improve transparency and liquidity. We’ve had other companies asking ‘how can we do that?’”
The Brazilian banking sector is already well consolidated; for that reason UBS’s acquisition of Garantia is something of a coup – especially since Goldman Sachs only gave up on negotiations with the impressive Brazilian bank in January.