DURING OCTOBER, RELEVANT M&A TRANSACTIONS TOOK PLACE IN THE ENERGY, MINING, AGRICULTURE AND RETAIL SECTORS IN THE ANDEAN REGION
OCTOBER SAW SIGNIFICANT M&A DEALFLOW IN THE ANDEAN REGION, WITH CHILE AND COLOMBIA LEADING THE ACTIVITY, WHILE PERU SHOWED MODERATE ACTIVITY. ADDITIONALLY, ONE OF THE LARGEST TRANSACTIONS OF THE YEAR WAS ANNOUNCED IN COLOMBIA, AFTER A US$ 1 BILLION AGREEMENT IN THE RETAIL SECTOR
In October, a significant announcement was made in the Chilean mining sector, as Codelco reached an agreement to acquire a 100% stake in the Australian-based company Lithium Power International Limited (LPI) for US$ 244 million. LPI owns 100% of the Maricunga Project, a mining site for the extraction and exploitation of lithium in the north of Chile. The project, currently under construction, includes 2,563 hectares of mineralized land in the Maricunga Salt Flats. Studies suggest that the site contains over 1.9 million tons of lithium carbonate equivalent (LCE) with an annual projected production of 15,200 tons. The Maricunga project is adjacent to other mining properties owned by Codelco in the area, enabling the buyer to leverage significant synergies to enhance the project’s performance. The transaction, which marks Codelco’s first acquisition in the lithium sector, is subject to approval by LPI’s shareholders, scheduled for January 2024. Codelco is positioning itself to play a major role in Chile’s lithium industry development, as part of the National Lithium Strategy announced by the Chilean government in April 2023. Codelco, a state-owned company, already maintains a significant role in the global copper mining industry as one of the largest copper producers in the world.
In the Chilean energy sector, Sonnedix completed the purchase of Arcadia Generación Solar, a photovoltaic (PV) portfolio with a total installed capacity of 416 MW, for US$ 556 million. The acquired portfolio, previously owned by Enel Chile, comprises four operational utility-scale photovoltaic plants: (i) Domeyko with 204 MW of installed capacity and operational since 2022; (ii) Carrera Pinto, with 97 MW of installed capacity and operational since 2015; (iii) Pampa Solar, with 79 MW of installed capacity and operational since 2016; and (iv) Diego de Almagro, with 36 MW of installed capacity and operational since 2014. Sonnedix first entered the Chilean market in 2015 and, after completing this transaction, will reach a total operational capacity of over 1 GW. Their current Chilean portfolio includes other significant projects, such as the 170 MW PV plant Atacama Solar, in operation since 2021, the 160 MW PV plant Meseta de Los Andes, currently under construction, and ARCO, a 290 MW solar and wind energy generation platform acquired in the last quarter of 2022. The company has also been expanding its international presence across Europe, Asia, and North America.
In the Chilean health retail sector, Inversiones Da Vinci completed the acquisition of a 100% stake in the retail pharmacy chain Farmacias Ahumada from Walgreens Boots Alliance. The transaction was initially announced in May 2023 but finally obtained the required regulatory approvals from the National Economic Prosecutor’s Office (FNE—Anti-Competitive Practices Regulatory Agency), in October 2023. Farmacias Ahumada, founded in 1969, is one of Chile’s largest pharmacy chains, with over 300 stores in the country. This agreement is expected to strengthen Farmacias Ahumada’s presence and reposition itself as one of the leading players in the industry, after facing economic challenges in recent years. The acquirer, Inversiones Da Vinci, was structured by the Chilean-based investment bank Larrain Vial. Its ownership incorporates several investors, including Guillermo Harding, the former owner and founder of Farmacias Cruz Verde, another major Chilean pharmacy brand and one of Farmacias Ahumada’s main competitors.
The agricultural sector in Chile also showed M&A activity during the month, as Frutura completed the acquisition of a 100% stake in Giddings Fruit. The latter was founded in Chile in 1985 and specializes in the cultivation and export of both traditional and organic berries, as well as cherries, kiwis, apples, and various other fruits. The company’s production spans through Mexico, Peru, Chile, Spain, and Morocco, with exports reaching the United States, European, and Asian markets. Frutura, on the other hand, belongs to Renewable Resource Group, a California-based Private Equity, and serves as a global sales platform for marketing agricultural products. The firm owns other six subsidiaries, with presence not only in Chile but also in Peru and Uruguay. The agreement marks the second transaction reported in the Chilean agricultural sector in the last two months, following the acquisition of a 368-ha hazelnut plantation done in September by the Ontario Teachers’ Pension Fund, an asset previously owned by Larrain Vial’s investment fund, Fondo de Inversión Sembrador IV.
In October, Calleja Group, the largest retailer in El Salvador, announced a US$ 1.17 billion offer to acquire 100% of the shares of Almacenes Éxito, one of the largest and most important supermarket chains in Colombia. Calleja Group operates the Super Selectos supermarket chain, a company that employs over 10,000 workers and has more than 100 stores distributed throughout El Salvador. The Salvadoran group’s main focus is on the food retail sector with around a 60% market share, but it is also present in other industries such as Real Estate, Technology, and Energy, among others. On the other hand, the French Groupe Casino is one of the biggest food retailers in Europe, and one of the controlling shareholders of Almacenes Éxito with over a 34% direct stake and 13% held through its Brazilian subsidiary Companhia Brasileira de Distribucion (CBD). Groupe Casino is also selling its stake held through CBD.
Also in Colombia, an important transaction took place in the commercial printing sector, in which Toppan Gravity acquired Hogier Gartner y Compañía. Hogier Gartner y Compañia is a national provider of credit & debit cards for local and international banks in Colombia, with more than 40 years of experience in the market. The company also specializes in the production and commercialization of ID cards, and the printing of tailor-made labels and packaging. The buyer, Toppan Gravity, is an international company with customers in more than 100 countries, offices, and operations facilities in Spain, Hong Kong, United Arab Emirates, France, and South Africa. Founded in 2002, the company specializes in providing digital and physical security documents, like credit card and ID verification chips, and focuses mainly on providing security services for payments and identity processes. After this transaction, Toppan Gravity will seek to continue expanding its presence in Latin America, consolidating its position as a global player in the industry.
In October, in the energy distribution sector, Peruvian Opportunity Company, which operates in the energy distribution sector in Lima, absorbed Ontario Quinta. Both companies are subsidiaries of China Three Gorges Corporation and owners of Luz del Sur. The latter is a Peruvian company that operates in the energy distribution sector which holds a concession area of over 3,500 square kilometers in Lima and nearby zones. China Three Gorges, on the other side, is a firm founded in 1993 by the Chinese government to build the Three Gorges Hydroelectric plant in the Yangtse River, the largest hydropower plant in the world. Three Georges’ core business is the hydropower electricity sector in China, in addition to overseas investments in the energy distribution market. After this acquisition, China Three Gorges Corporation will remain Luz del Sur’s controlling shareholder with a 97% stake.
Another relevant transaction in the Peruvian M&A market during October was the acquisition of Sojitz Acus Investment for a total amount of US$ 133 million by the previously mentioned Luz del Sur. Sojizt Acus Investment is a renewable energy company that specializes in the operation of solar power plants in Arequipa, the second most populated city in Peru. This transaction represents a major step for Luz del Sur’s transition to renewable energy, consolidating its position as one of the most committed companies in the Peruvian clean energy sector. Additionally, this acquisition strengthens the firm’s investment plan for allocating and improving its energy infrastructure, in which it has already invested more than US$ 740 million in the last 5 years. Such investments allowed the company to reach approximately 1 million commercial, industrial, and residential clients, one of Peru’s biggest and most important energy distribution companies.
Activity in October continued in both middle and large market transactions. The Andean Region showed a high level of intensity in the energy, retail, agriculture, and mining sectors with Chile and Colombia leading the activity. The year-end outlook will depend on global macroeconomic trends as well as the political situation in the region, which includes a constitutional referendum in Chile, regional elections in Colombia, and the current stabilization of the Peruvian government.