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Austin, TX (ZprymeNews) April 28, 2008 -- Relative to other economies growing out of their former 3rd world selves, industriesThere are not enough acquisitions made by Brazil-based companies than that of Brazil companies acquired by other companies. The reason for this is due to the privatization program of Brazil. According to the Inter-American Development Bank and the Latin American Research Network Research Network Working Paper #R-455 on “Costs and Benefits of Privatization: Evidence from Brazil”, the privatization program of Brazil is a major international standard undertaking. The program started in 1991, where in 2001 the government of Brazil transferred the control of its 119 firms and minority shares in companies in Brazil to the private sectors.

This further explains why the acquisition activities in Brazil were mostly those of foreign companies acquiring Brazil-based companies. The auctions made produced US$18.1 billion worth of revenues and US$6 billion shares in private firms sold.

Likewise, according to said Research Network Working paper #R-455, the sectors that were auctioned for privatization were as follows: electricity which accounted for 31 percent of the auctioned companies; telecommunications which accounted for another 31 percent; steel and mining for 8 percent each, petrochemicals and oil and gas for 7 percent each; financial for 6 percent and others.

There are however acquisitions that were made by Brazil-based companies. Eileen Alt Powell on “Brazil’s Petrobras concludes purchase of Shell assets in Colombia”, reported that the Brazilian government-run oil company, Petroleo Brasileiro SA (Petrobras), acquired in full the assets of the Royal Dutch Shell in Columbia. According to the report, the Shell Company has 39 service stations and convenience stores located in Bogota, Colombia and a lubricant mixing plant and storage base which is located in Puente Aranda - acquisition reached US$140 million. This is in line with the objective of Petrobras to expand the operation of their operations in Colombia aside from its operations in Argentina and Bolivia and its being the largest fuel distributor in Brazil.

Likewise, 09 January 2008 Reuters reported, “Brazil telecom group Telemar eyes acquisition”, Telemar Participacoes, the Brazilian telecommunications group, announced that it is on the process to acquire its rival telecom group, Brasil (Brazil) Telecom Participacoes and is in the process of acquisition study in terms of areas to operate. This is after the failure to make a tie-up agreement between the two companies.

Additionally, Reuters reported, “Update 2-Brazil’s CVRD plans $59 bln 2008-2012 investments”, that Brazil’s largest iron ore producer and exporter, CRVD, announced that it plans to spend $59 billion; more than twice the output of copper to expand iron ore and nickel production in 2008 to 2012. According to CRVD, the company seeks to increase the output of iron ore to 422 million tonnes for the years 2008 to 2012 from the 300 million tonnes production in 2007. CRVD also wants to increase the production of nickel from 260 million tonnes in 2007 to 507 million tonnes in 2012. Copper is also expected to rise from 290 million tonnes in 2007 to 592 million tonnes in 2012. These are prompted by the global demand for minerals and metals. For 2008, Compania Vale do Rio Doce is expected to invest $11 billion. The main business of CRVD is iron ore, however it recently acquired the Canadian nickel company Inco for $17.6 billion which is among the largest acquisitions made by a Brazil-based company for 2007.

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Zpryme: Emerging Markets Group

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