ARAMCO’S ACQUISITION OF ESMAX STANDS OUT IN THE M&A INDUSTRY DURING SEPTEMBER IN THE ANDEAN REGION
SEVERAL M&A DEALS WERE ANNOUNCED OR CLOSED IN THE ANDEAN REGION DURING SEPTEMBER. THE ACQUISITION OF ESMAX BY ARAMCO IN THE OIL & GAS SECTOR WAS THE MOST NOTABLE. HOWEVER, THE INFRASTRUCTURE, RETAIL AND LOGISTICS INDUSTRIES WERE ALSO RELEVANT WITH VARIOUS TRANSACTIONS IN CHILE, PERU AND COLOMBIA
In Chile, the announcement by Aramco to acquire Esmax Distribución from Southern Cross Group (SCG) stood out in September. Esmax Distribución is a Chilean company with over 100 years in the Oil & Gas sector. The firm operates under the license of Petrobras and focuses on the fuel distribution through gas stations and terminal plants. The seller, SCG, is a private equity firm based in Santiago, Chile, with operations across Latin America. It has a portfolio of more than 25 companies located throughout the region and across several industries, such as IT Services, Telecom, Power Generation, and Waste Management, among others. Aramco, the buyer, is the biggest corporation in Saudi Arabia and the world’s third-largest company with a market capitalization of over US$ 2 trillion. The Saudi-based multinational corporation specializes in petroleum and natural gas exploration, production, and distribution. It is a key player in the global energy sector operating extensive oil reserves and being a leading exporter of crude oil and natural gas. The company is also growing in downstream activities such as refining and petrochemical production. The transaction comprises the transfer of 100% of Esmax Distribución SpA shares to Aramco Overseas Company BV, a subsidiary of Saudi Aramco. In 2016, SCG acquired three units of Esmax Distribución: real estate, infrastructure, and the fuel distribution network. The deal between SCG and Aramco is related to the latter, which includes 300 gas stations and 150 convenience stores throughout the country. This acquisition represents Aramco’s first investment in South America and hopes to use this asset as a platform to expand the Aramco brand throughout the region. The transaction is currently subject to approval by the National Economic Prosecutor’s Office (FNE) and the transaction valuation has not been disclosed.
Furthermore, during September, Cencosud completed the acquisition of the Breti convenience stores chain from Administradora de Retail y Servicios (ARS). ARS is a company that groups various brands operating in the convenience store segment, mainly under the Maxik banner. Before the sale of Breti (comprised of 15 stores), ARS maintained almost 130 stores throughout Chile, ranking second in the country’s convenience stores industry, only after the Mexican group, Femsa, owner of the OXXO chain. Cencosud, the buyer, is a publicly traded Chilean-based holding that consolidates the operations of Jumbo and Santa Isabel supermarkets, Paris and Easy department stores, and Cencosud Shopping Centers, among others. The firm operates in the convenience store segment through Spid, the brand that is expected to absorb the acquired assets. Breti has been operating since 2019, providing premium and imported SKUs for immediate consumption. Since its founding, the chain opened its stores in key locations of Santiago’s more affluent socioeconomic neighborhoods where the stand-alone segment has gained potential over the years. The transaction has already been approved by the anti-trust regulatory authorities.
In the Chilean infrastructure sector, Penta completed the acquisition of a set of highway concessions from BTG Pactual for nearly US$ 46 million. Through its Investment Fund Penta Las Américas Infraestructura Cinco, the company secured a 50% stake in the entity that controls the Variante Melipilla bypass and the Talcahuano-Penco interport route. Specializing in the development of alternative assets, Penta focuses mainly on the real estate, infrastructure, and hospitality sectors. The seller, BTG Pactual Chile, is the Chilean subsidiary of the Brazilian financial conglomerate BTG Pactual, a corporation that operates in industries such as Investment Banking, Asset Management and Wealth Management. This divestiture from BTG occurred three months after the firm announced its intention to liquidate its infrastructure fund, which was incorporated over 30 years ago.
An important transaction was announced in the Colombian mining industry, in which AngloGold Ashanti agreed to sell its 50% stake in the Gramalote Project to the Canadian-based B2Gold Corp, for US$ 60 million. Originally, the project’s ownership was structured as an equal-parts joint venture between the two companies, so, after this operation is completed, B2Gold Corp will be the sole owner of the Gramalote Project. This gold mining project is located in the north of Medellin, in the district of Antioquia. The project accounts for 2.11 million gold ounces of indicated mineral resources, and 0.74 million gold ounces of inferred mineral resources. Currently under development, Gramalote is one of eight B2Gold Corp projects globally and the only one in the Andean Region. After this transaction, AngloGold Ashanti will continue executing additional projects in the region, which include two other operations in Colombia, two in Brazil, and one in Argentina.
Additionally, in Colombia, another important announcement was made in the logistics sector where Rhenus Logistics, a subsidiary of the German holding company Rethmann Group, announced the acquisition of the Colombian-based firm Blu Logistics. Established in 1996, Blu Logistics spans throughout Latin America and Asia, with presence in Argentina, Ecuador, Mexico, Uruguay, Paraguay, China, and Hong Kong. The Colombian firm provides global supply chain and logistics integration via air and maritime freight, customs services, and operations management. This acquisition represents a strategic move by Rhenus Logistics, which will now extend its geographical coverage and service portfolio in a region where the company expects an increase in demand in the upcoming years. The Germany-based corporation currently employs over 38,000 people, operates in 1,120 sites, and generated revenues of US$ 9.1 billion in 2022. The acquisition of Blu Logistics is the second transaction announced by Rhenus Logistics this month, following their agreement to purchase 51% of LBH Group, a port agency corporation with presence in over 30 countries worldwide.
In the Colombian real estate sector, Parque Arauco Colombia, a subsidiary of the Chilean Parque Arauco, announced the acquisition of a 51% stake in the fiduciary rights of Parque Fabricato from Fondo de Inversión Colectiva Inmobiliario Inmoval Investment Fund, managed by Credicorp Capital. The considerations for the transaction include a payment of US$ 17 million at closing and a price adjustment to be paid in 2026. Parque Fabricato is a shopping center located in Medellín with approximately 57,000 square meters of gross leasing area (GLA). The asset has been managed by Parque Arauco since its inauguration in 2021 and represents the first investment of Parque Arauco in the city of Medellín. This operation represents the Chilean company’s second deal announcement in Colombia since August, after reaching an agreement for a 51% stake acquisition of the fiduciary rights of Titan Plaza, located in Bogotá. Additionally, during 2021 and 2022, the company also developed Parque Alegra in the city of Barranquilla.
One transaction that was completed in Peru during the month of September was the acquisition of Grupo Forte by the Swedish-based ASSA Abloy, a market leader in access solutions in the security industry. Grupo Forte is a renowned producer of padlocks and locks in Peru, which generated nearly US$ 18 million in revenues in 2022 and employs almost 350 people. With this acquisition, ASSA Abloy continues to extend its brand portfolio, comprising more than 130 brands, while expanding its geographical presence to more than 70 countries. The Swedish company intends to continue strengthening its position, both in emerging and developed markets, through organic and inorganic growth. Since its foundation in 1994, ASSA Abloy has completed approximately 300 acquisitions, the last ones being Forte in Peru, Lawrence Hardware and Gallery Specialty in Canada, Sunray Engineering in the United Kingdom, Hardware and Home Improvement in the United States, and Mottura in Italy. This strategy allowed the company to grow 10% annually in 2022 and reach revenues of US$ 11 billion in the same year.
In the Peruvian agribusiness sector, Agrokasa Holdings, a local producer of avocados, grapes, blueberries, and asparagus, was acquired by a subsidiary of the Guatemalan firm Agroindustrias Hame. The Peruvian firm Agrokasa Holdings holds over 2,700 hectares of land located in the districts of Ica and Barranca. In 2022, the corporation reported production volumes of 33,700 tons of avocado, 16,700 tons of grapes, 7,700 tons of blueberry, and 6,300 tons of asparagus, all of which were exported to 50 countries. The acquirer, Industrias Hame, is a leading palm oil and banana producer headquartered in Guatemala, with international presence in Colombia, Mexico, Costa Rica, and now Peru. The company’s high output of banana production positions the Guatemalan firm as the leading independent producer of this fruit globally, with 37 million boxes produced yearly. The acquisition will allow Grupo Hame to continue its geographical expansion and diversify their product portfolio.
During 2023, M&A regional activity continues to show dynamism despite high interest rates. The Andean Region continues to be a geographical zone of interest for international investors, primarily to gain presence in emerging economies. Middle-market transactions have persisted in traditionally active sectors such as infrastructure, mining and logistics, which have remained resilient throughout the year. Nevertheless, large transactions, such as Aramco’s acquisition of Esmax, continue to occur, clearly indicating that investors are confident in offsetting the risks with the expected future returns on their investments in the Andean Region.