Vale megadeal puts Morgan Stanley, Bradesco at the top of Brazil M&A
By Guillermo Parra-Bernal and Tatiana Bautzer
SAO PAULO (Reuters) - Morgan Stanley (MS.N: Quote) and Banco Bradesco BBI SA topped Brazil's mergers and acquisitions rankings in the first quarter, buoyed by advisory roles in the $21 billion corporate reorganization of Vale SA (VALE5.SA: Quote), the world's No.1 iron ore producer.
New York-based Morgan Stanley and Bradesco BBI, the investment-banking arm of Brazil's No. 3 listed lender Banco Bradesco SA (BBDC4.SA: Quote), surpassed rivals in last quarter's rankings by almost 10 times in terms of announced M&A volumes, Thomson Reuters deals intelligence data showed on Tuesday.
Both banks advised two of Vale's main shareholders on the deal. Under the terms of the reorganization, Vale will become a company with no defined controlling shareholder within three years, a landmark step to help stifle state interference in the company.
The deal represents a milestone in a country long hobbled by corporate governance scandals and reorganizations that hurt minority investors. It comes as Brazil's government is selling dozens of power and sanitation utilities, as well as assets of state-controlled oil company Petróleo Brasileiro SA (PETR4.SA: Quote).
Companies announced $27.121 billion worth of Brazil-related mergers from January to March, up six-fold from a year earlier, the data showed. Excluding Vale, the value of M&A deals reached $6.195 billion, less than half the amount seen in the same period four years ago, before the recession struck.
The number of deals in the first quarter fell 35 percent to 108 from a year earlier, the data showed.
Stricter legal and regulatory scrutiny has continued to put the brakes on M&A announcements this year, compounding the impact of the recession and political turmoil that has kept keeping buyers and sellers at odds over valuations.
According to Alessandro Zema and Eduardo Miras, co-heads of Brazil investment banking for Morgan Stanley, M&A deals should accelerate this year, even if increased debt and equity capital markets activity posed some competition for the segment. Continued...