TTR Dealmaker Q&A with Felipe Creazzo – K&L Gates

Felipe Creazzo

Partner at
K&L Gates

Arvato Bertelsmann takes controlling stake in Intervalor

On 29 March, Guetersloh, Germany-based Arvato Bertelsmann increased its equity interest in São Paulo-based credit collections firm Intervalor to 81.5% following its initial 40% acquisition in June 2015. K&L Gates Partner Felipe Creazzo led the international legal team advising the buyer after having advised in the prior transaction.

Q: How did K&L Gates land the mandate to advise Arvato Bertelsmann?

A: I advised it on its initial 40% stake acquisition in 2015. It was a natural choice for the client to rely again on me at K&L Gates for the follow-on deal in view of my experience with the structure, with several of the commercial and business aspects related to the acquisition and with internal policies that needed to be reflected on the transaction documents. These aspects streamlined the transaction and made it more cost efficient. Needless to say, a local firm was needed to carry out local due diligence and make sure all the commercial aspects were properly reflected on the documents and complied with local law. Lobo & de Rizzo, the firm I was previously a partner with, which was involved in the first deal, was the appropriate choice. While I’ve left Lobo & de Rizzo Advogados, I have good friends there, very fine and seasoned M&A lawyers among them, and look forward to other opportunities to work together.

Q: How did the fact that you’d worked with this client shape your approach in this most recent transaction?

A: Although my Brazilian admission is properly suspended with the Brazilian Bar as I practice foreign law only, the client greatly benefited from my broader perspective of the transaction as a dual-admitted lawyer. My coordination of the local firm’s involvement ensured that all local law compliance was in place on an optimized and cost efficient manner. Since I’ve been on both sides, I can work with local firms effectively and also become a direct channel of information to the client with respect to many of the local law aspects that would normally take time to be digested. In an international capacity, it’s easier for me to reflect the clients’ business needs into the agreement.

Q: To what extent did Brazil’s current recession play a role in the timing of this deal?

A: Intervalor is a financial services provider in Brazil and one of its core activities is collection services. It’s an active moment for that type of industry in Brazil. Also, there’s a part of the business that includes the promotion of credit products that can be expected to recover significantly in the near future. This transaction was not based on a short-term perspective for Arvato Bertelsmann. It was generally a good moment to invest and to benefit from both still low prices and a more beneficial currency exchange rate.

Q: To what extent is the follow-on deal a reflection of achieving pre-established benchmarks?

A: The follow-on acquisition was the result of convenience and negotiation, but there were in fact opportunities for changing shareholding percentages that could materialize sooner or later based on the terms of the prior agreement. For this deal, it all came together as a result of friendly conversations among the shareholders. Everyone was happy with the progress made since the initial entry, and there was a lot of synergy and systems were being successfully integrated. There’s already a new face to the company. Becoming part of an international group is going to be beneficial to every stakeholder, from management to employees to shareholders. There’s an enormous positive vibration to this deal.

Q: Why was Intervalor the right stepping-stone into Latin America?

A: Brazil is not for the weak of heart, it’s a tough market to crack. Doing business here, by far the largest economy in Latin America, provides any foreign investor with useful tools not only to do business here, but also to succeed in other Latin American markets. It doesn’t necessarily mean that if something works here it will work in Chile or Argentina, but it does help starting with Brazil. The size of the market here in Brazil, as compared to other Latin American markets, was also an important factor.

Q: What made this deal stand out among other M&A transactions you’ve advised on?

A: It was a particularly complex deal. In terms of legal documentation, there was a prior acquisition arrangement in effect that had to subsist. Matching this new acquisition in 2017 with the previous one was hard work from a legal perspective, in every aspect of the transaction documents.

TTR Dealmaker Q&A – Moacir Zilbovicius

TTR Dealmaker Q&A

September 2016

Kroton Educacional acquires Estácio Participações

USD 1.63bn

Moacir Zilbovicius
Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados

On 16 August 2016 Estácio Participações accepted Kroton Educacional’s USD 1.63bn takeover bid. Moacir Zilbovicius was part of the legal team at Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados that advised the seller in this monumental transaction.

Q: How did Mattos Filho land the advisory mandate and when was the firm retained?

A: We were engaged in the first week of June thanks to our relationship with Estácio’s board members and owing also to referrals from financial institutions involved in the deal.

Q: What prompted your client to explore strategic alternatives?

A: Both Kroton’s and Grupo Ser´s offers were unsolicited. As far as I know, Estácio was not pursuing strategic alternatives at the time. What ensued after Kroton’s offer was made public was basically the board members assessing the offer and pursuing the best alternative available for its shareholders.

Q: Beyond the economic factor, what made Kroton’s bid more enticing than Grupo Ser’s previous offer?

A: Several factors came into play, but, beyond the economic and strategic factors, one that played an important role was management´s assessment of the likelihood of shareholders from both companies approving the deal. 

Q: How does this transaction impact Brazil’s higher education landscape?

A: Both the Brazilian antitrust authorities and Ministry of Education are assessing the impacts of this deal, if any, and should issue their views on this, hopefully, sooner than later.

Q: What practice areas were critical in the deal and in what way did the transaction require Mattos Filho to employ its unique capabilities?

A: I am proud to say that Mattos Filho was involved in almost all of the recent merger transactions involving public companies in Brazil. This gives us not only a competitive edge, but also relevant know-how and expertise in handling such complex transactions. We have also actively participated in numerous deals involving corporations with no controlling shareholder or group, which enabled us to provide Estácio’s management with the specific guidance it needed to handle the unique situation it found itself in. Obviously, addressing the antitrust circumstances involved in the transaction was also highly important. We have a highly specialized antitrust group that allowed us to live up to the task at hand.

Q: What antitrust hurdles does the transaction face?

A: Though the deal was approved in the general shareholders meetings of both companies, it remains subject to the approval of the Brazilian antitrust authorities and Ministry of Education. The businesses of Kroton and Estácio are very complementary, in particular from a geographic standpoint, and the parties are confident that the necessary antitrust approval will be obtained in due course. 

Q: What distinguished this transaction from other M&A deals Mattos Filho has advised on?

A: The fact that it involved two companies with no controlling shareholder or group of shareholders, and that it was prompted by an unsolicited offer that led to competing offers from the market, and almost the launching of a tender offer by a relevant shareholder and member of the target´s board, made the deal very unique.

Q: How is the legal advisory work different in such a transaction where there is no controlling shareholder? 

A: Our work was mainly focused on advising the board of directors and the special committee that was created specifically to negotiate the transaction with Kroton.


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TTR Dealmaker Q&A – Paula Muñoz Romero (Muñoz Romero Asesores)

TTR Dealmaker Q&A

December, 2015

Fluiconnecto acquires a 35% stake in Man-Par with option to acquire 75%

USD 686.5m

Paula Muñoz Romero 
Muñoz Romero Asesores

On 11 September Netherlands-based hydraulic hose manufacturer Fluiconnecto closed the acquisition of a 35% stake in Man-Par, a distributor of its products located in Bogotá, Colombia. Paula Muñoz of Muñoz Romero Asesores was legal advisor to the buyer for this deal in which Fluiconnecto acquired effective control with an option to buy the remaining shares of the selling shareholders in 2017.


Q: How did you land this mandate?

A: It was a referral from Gómez-Pinzón Zuleta Abogados. One of the partners there recommended me to Fluiconnecto. I believe they had a conflict of interest.

Q: How did the buyer identify the target?

A: Fluiconnecto sold its products through Man-Par already and was interested in acquiring shares in the company in order to establish a greater presence here. Fluiconnecto approached the family shareholders who were interested in selling, so we began discussing a transaction.

Q: When did the negotiations begin?

A: We began discussions around February 2014, but the legal aspect didn’t begin until September 2014.

Q: Why did the buyer opt to acquire the company little by little, rather than acquire 100% outright from the start?

A: Fluiconnecto wanted to see the results of the company with their input. It expects Man-Par to achieve great results and if it does then they intend to exercise their call option to acquire the remaining shares of the selling shareholders.

Q: How did the worsening economic situation in Colombia impact the transaction?

A: We thought that it would impact it, but it didn’t. It hasn’t been as good a year for transactions as we thought it was going to be, but in the end Fluiconnecto was so interested in coming here. Foreign investors are still interested in investing here, as they consider Colombia to be a good country for the future and Fluiconnecto thought it a good time to invest now. Maybe things aren’t as profitable now, but Fluiconnecto took a long-term view and expect it to improve in the next few years.

Q: How did Fluiconnecto ensure its place as master of Man-Par’s fate while holding only a minority stake?

A: Fluiconnecto has control of the company through a shareholders agreement. The idea is to purchase more shares in order for them to get 100% of the selling shareholders in the next two years. Fluiconnecto has the right to purchase such shares and has agreed on the price, it’s just a question of Fluiconnecto to exercise this option.

Q: To what extent were antitrust concerns a factor in this transaction?
A: We had to ask for permission from the antitrust authority as Fluiconnecto was already distributing its products here. It already participated in the market and though it was a concern since it already had some clients here, it wasn’t difficult to demonstrate to the regulator that the deal wouldn’t have adverse impacts on the market.

Q: What is Man-Par’s most significant client base and how does Fluiconnecto plan expand?

A: Man-Par sells parts that Cerrejon needs to operate. That’s the biggest client, which needs those parts constantly regardless of how much coal they extract or sell. The company is aiming to get a foothold in the oil and gas market as well as other interesting markets, but hasn’t been concentrating its efforts on doing it up to now. Fluiconnecto will bring its experience here and make a commercial impact here in Colombia with a new commercial model to get new clients and to get into the oil and gas market as well as other markets.

Q: What compelled Man-Par shareholders to pursue a sale?

A: What I understand is that Fluiconnecto approached them. The shareholders are the daughters of the original owner. They didn’t have as much experience as their father in the business and were really interested in selling some of their shares to Fluiconnecto. The sellers had an interest in putting the company in good hands and the buyer approached at a time when the country wasn’t getting as much foreign investment, so it represented a good opportunity for an exit.

Q: What went into the due diligence process?

A: The seller changed lawyers three times in the process. Philippi Prietocarrizosa & Uría conducted an internal due diligence process and shared it with the buyer. Then the seller changed to another local firm before finally retaining Brigard & Urrutia to close the deal. Fluiconnecto hired us to do the due diligence mostly in the foreign trade zone assets and tax due diligence, and used internal attorneys for labor and basic corporate due diligence, which of course we had to verify and confirm when drafting the share purchase agreement.

Q: Why are mid-market European companies still confident in Colombia despite the economic downturn in the past 12 months?

A: Colombia has stable laws, they are sure of what is going to happen and how things will work out, except for the tax law, the rest of it is kind of stable. Tax issues tend to vary from one administration to another and it’s something that changes in every single country. Though this impacts acquirers like Fluiconnecto, it’s likely something that they are used to.

Q: What does this entry in Colombia represent within the context of Fluiconnecto’s ’s regional growth in Latin America?

A: Fluiconnecto views Colombia as one of its entry points into Latin America, since it already operates in Argentina and Peru. It intends to grow profits at the company to present itself on a strong footing within Latin America. We believe Fluiconnecto will likely look at other acquisition opportunities regionally.

Q: What stood out for you in this transaction to distinguish it from other M&A deals you’ve worked on?

A: The fact that the sellers changed their lawyers three times was really challenging. These kinds of deals are quite complicated, and if you don’t have a sophisticated counterpart it’s quite difficult to deal with sellers when they aren’t used to this kind of transaction. The negotiation with the sellers was really complicated; they didn’t understand how it could work through a contract giving the buyer control in a minority stake acquisition. It is quite common practice if the financial contribution is going to be really significant. The buyer is also granting financing in the form of loans, so the financial effort from Fluiconnecto is really significant and that’s why it is getting control even before purchasing a majority share.

Q: How was the purchase price arrived at?

A: Fluiconnecto valued the target and started negotiating the price with the sellers – this was an unusual way of handling the deal from a seller’s perspective. We tried to make everything as fair as possible and as simple as possible. They only hired Brigard & Urrutia in February or March 2015 as their final legal advisor for the deal.

Q: Did the difference in corporate culture impact the deal in any way?

A: Because of the relative size of both companies, the way Man-Par handled their business was very different, but because Fluiconnecto was already working with Man-Par as a distributor of its products, it was already familiar with the way they handled the company and the different ways of doing business didn’t prove to be an obstacle.


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