The Tupi FTC: “Badin’s the Boy to Bust the Trusts!”

I read it in one of those newspapers today, the Jornal do Commercio (Rio), I think it was. That, for the time being, is how I pay the bills.

A posse do novo presidente do Conselho Administrativo de Defesa Econômica (Cade), Arthur Badin, acabou se transformando em ato de independência do órgão antitruste. Durante o evento, o ministro da Justiça, Tarso Genro, afirmou que os conselheiros não vão ceder a pressões indevidas ou corporativas ao julgar fusões e aquisições de empresas no período de crise internacional.

The swearing in of the new chairman of CADE, the Administrative Council on Economic Defense, Arthur Badin, wound up turning into a declaration of independence by the antritust regulator. During the ceremony, Justice minister Genro said that the commissioners will not cave in to improper or corporate [sic] pressures when sitting in judgment on mergers and acquisitions during the international financial crisis.

The sale of the Grupo Abril’s TVA cable TV operator to Telefônica has yet to be ruled on from the point of view of market concentration, I think I read, which is what first attracted my attention to the changing of the guard. This is a deal that a client might actually pay me to be interested in.

The Itaú-Unibanco merger is set for a decision by CADE on 21 November, I think I just read.

So little time, so much to know.

Para Genro, o trabalho do Cade deverá crescer com a crise externa, pois as empresas deverão alegar dificuldades de captação de créditos juntos aos bancos para justificar a realização de fusões. Outro problema que deve surgir, segundo o ministro, é o aumento de casos de cartel, já que, num período de perda de faturamento, algumas empresas podem tentar compensações através de acordos ilegais com concorrentes, como fixação de preços ou divisão de clientes.

In Genro’s view, CADE’s role should increase as a result of the crisis abroad, as companies allege difficulty obtaining bank credits in order to justify mergers. Another problem likely to emerge, the minister said, is an increase in cartel cases, since at a time when revenues are down, some companies will try to compensate by making illegal deals with competitors, such as price-fixing or divvying up their customer bases.

In Praise of Itaúnibanco

Aziz Ahmed, columnist for the Jornal do Commercio — of Rio de Janeiro, that is; there are several — praises the handling of the recently announced merger of Itaú and Unibanco, two of Brazil’s largest financial institutions.

And rightly so, it seems.

The deal announcement really did come as a proverbial thunderclap out of the blue.

A complete surprise (though pundits had noted that the sector was ripe for consolidation, generally speaking.) A truly remarkable example of information security and discipline in a media environment where leaking and phreaking and pumping and dumping seem like the rule rather than the exception.

It was, Mr. Ahmed says, a deal worthy of the First World. If only First World M&A deals were all as squeaky clean as Mr. Ahmed paints them.

File under “Brazilian self-love and self-hatred” — on which see also

• “Dantas x Lemman: Brazilian Capitalism Then and Now”

Empresários, políticos e o pessoal do mercado comentam, com respeito e admiração, a postura das tradicionais famílias Setubal e Moreira Salles na condução do processo de fusão dos bancos Itaú e Unibanco, toda negociada na mais absoluta discrição.

Business owners, politicians and market operators are commenting, with respect and admiration, on the conduct of the traditional Setubal and Moreira Salles dynasties in their handling of the Itaú-Unibanco merger, which was negotiated with the most perfect and absolute discretion.

“ANAC Dogs Varig-Log Vulture”: Rumor Mill

Dilma Rousseff, Minister of the Casa Civil. "The 'dossier' scandal and 'tapioca' (corporate credit card) scandal have fizzled, but the Varig scandal — a by-product of the 'chaos in the skies' scandal — is bigger, and the fuse is lit!" Scandals tend to come and go without much closure here.

Relatório reservado nº3423 18/07/2008: The rumor mill has it that Brazil’s civil aviation agency, ANAC, is moving to tie the hands of MatlinPatterson while litigation between the U.S. “distressed equity” investor and its Brazilian partners continues.

The lawsuit has to do with how to divvy up the proceeds of the sale of Varig assets to Gol airlines by VarigLog, controlled by Matlin and the Brazilian partners — an interesting case of the tail selling off the dog. The Chinese investor has tended to get the “evil Fu Manchu” treatment from a Brazilian press with a kneejerk bias against “foreign speculative capital,” it seems to me.

Fecha-se o cerco contra Lap Chan. A Anac está exigindo do investidor um compromisso formal de que ele não vendeu ou venderá a estrangeiros participações no capital da VarigLog superiores a 20%. O documento deverá ter aval de tribunais brasileiros e norte-americanos. Parece filigrana, mas trata-se de um acordo visceral, com caráter retroativo, que poderá multiplicar as sanções a Lap Chan, caso venha a ser provada a venda irregular de ações a estrangeiros.

The siege is closing around Lap Chan. ANAC is demanding that the investor state formally that he has not sold and will not sell stakes in VarigLog superior to 20% of its equity. The document will have to be cleared by U.S. and Brazilian courts. It seems like a tiny detail, but this would in fact be a very significant contract, with retroactive force, that could multiply the penalties against the “vulture fund” investor if it turns out he sold shares to foreign investors in an irregular fashion.

Dreyfus on Agrenco Takeover: “We Won’t Be Ready ‘Til We’re Ready”

A follow-up to today’s Material Event from Agrenco with respect to an anticipated bailoutby Dreyfus. Source: Plantão Empresas. Dreyfus issues the following response to

• Agrenco-LDC: Disclosure of a Material Non-Event?

Com relacao ao comunicado da Agrenco aos mercados datada de 9 de julho de 2008, a LDC, atendendo a expressa solicitacao da Agrenco, informa que continua a envidar seus melhores esforcos, incluindo no que diz respeito ao processo de due diligence, com a mesma elevada intensidade, no sentido de ser capaz de informar a Agrenco quanto a sua intencao de concretizar ou nao a operacao objeto do MOU, antes do prazo nele fixado. A luz das informacoes que se tornaram disponiveis
nesta data, a LDC nao podera precisar quando estara em posicao de prover tal informacao, a qual tambem depende das acoes e diligencias da Agrenco que estao em andamento.”

With respect to Agrenco’s disclosure of a Material Event to the market on July 9, 2008, LDC, at Agrenco’s express request, affirms that it continues to do its utmost to be able to inform Agrenco of whether or not it intends to enter into the tranaction contemplated by the MOU within the time frame contemplated therein. In light of information that has come into its possession to date, LDC cannot state specifically when it will be in a position to provide such information, which also depends on actions by Agrenco and due diligence that are ongoing.