BEIJING, Oct. 28 (Xinhua) -- In the third quarter of this year, the merger and acquisitions (M&As) in Brazil reached 98.9 billion U.S. dollars, up 109 percent year on year, of which the foreign capital contributed 46.2 billion U.S. dollars, representing a share of 46.7 percent, according to the TTR, a consulting company in Brazil.
It is worth noting that of the five big M&A cases in the third quarter, apart from the Brazilian bank Bradesco's takeover of HSBC Brazil branch, the remaining four were conducted by foreign enterprises. In particular, three M&A cases involved the Chinese enterprises.
On October 10, the China Three Gorges International Energy Investment Group Corporation signed a stake acquisition agreement with the U.S.-based Duke Energy to buy out the latter's Brazilian company for 1.2 billion U.S. dollars.
According to the Three Gorges, the transaction remained subject to approval of the regulators in China and Brazil. After the transaction completion, the Three Gorges Group will bring its total capacity under management and on proportional equity holdings in Brazil to 8.27 GW.
On September 30, China Molybdenum Corp announced to complete the asset delivery with the Anglo American. Earlier this time, the Chinese company unveiled plans to buy Anglo American's niobium and phosphate mines in Brazil for about 1.7 billion U.S. dollars.
On July 2, the Brazil-based CPFL Energia SA announced that the State Grid Corporation of China was in talks with the Camargo Correa SA to buy its 23.6 percent stake in the CPFL for about 12 billion yuan.
On the sidelines of the G20 held in China's Hangzhou in September, Brazil's present Michel Temer unveiled an investment list worth 269 billion U.S. dollars to the Chinese investors. The list involved fields including oil and natural gas, energy, railway, telecommunication, road construction, health facility and airport.
The Chinese enterprises are expected to seize the opportunity and increase investments in Brazil in coming years, experts note.
The M&A market in Brazil is recovering. Brazil's economy is bottoming out and the enterprises' confidence starts to restore. Therefore, expectations for the M&As are high. These enterprises are using the acquired Brazilian companies as the stepping stone to the Brazilian market, said Daniel Gunzburger, a partner of Tauil & Chequer Advogados, a law office in Brazil.
Meanwhile, many enterprises came well prepared. In the case of the State Grid Corporation's purchase of the CPFL, the Chinese company used its own funds and did not use the credit tools, said Marco Goncalves, head of the investment banking at BTG Pactual.
The Brazilian investment environment is not only full of attraction, but also challenging for the Chinese enterprises. In the M&As, the Chinese enterprises has to make full use of the local professional teams and deeply explore potential problems of the acquisition targets, carry out in-depth and thorough due diligence, and identify risks well to lay a good foundation for the M&A decisions, said Zhang Jun, a partner of the Demarest law firm.
Meanwhile, the Chinese enterprises have to respect the local culture, make careful plans, properly cope with problems in M&As, train their own professional teams to complete M&As and make preparations for more difficult enterprise integration in the future, Zhang added.
(Edited by Hu Pingchao, hupingchao@xinhua.org)
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