Landscape Littered with Unfinished M&A

Several high profile M&A transactions have fallen victim to difficult market conditions in the region. Among those initiated, but not completed are Votorantim’s acquisition of a 28% stake in Aracruz belonging to the Lorentzen Group. The deal was officially put on ice on Friday when VCP management told investors that closing had been suspended due to market conditions. The result bodes ill for Lorentzen, which had signed a document with VCP’s parent Votorantim to sell the stake for $1.7bn in mid-September. The stock then fell, and was down some 54% versus mid-September by Friday, when the deal was said to be off. VCP executives say the deal has not been canceled and people close to Lorentzen say its contract protects it well from material adverse changes, which suggests that it could have some legal recourse. Others that have fallen include Cyrela’s $1.1bn acquisition of Agra Empreendimentos, to be paid for in shares, though the companies say it fell apart because of regional incompatibilities. And last month Mexico’s Minera Autlan gave up on selling itself following several months of deliberating over pitches from an array of global suitors. Some 46 deals over $50m in size are scheduled to close between October 20 and December 31, according to Dealogic. They are worth a combined $32bn and include Bunge’s acquisition of Fertilizantes Fosfatados, for $4.1bn and a $7.5bn purchase of Brazsil Telecom and its subsidiaries by Telemar, according to the data tracker.