Portuguese companies increasingly eye overseas investments

Large Portuguese companies are increasingly taking advantage of acquisitions abroad launching public acquisition offers for companies in other countries.

In recent months companies like Sonae, The Navigator Company and Bondalti have been on opportunity shopping sprees in France, Scandinavia, and the UK reflecting a continued trend among Portuguese companies to internationalise reports business daily Negócios.

The latest was this week when Sonae, which owns the chain of supermarket Continente in Portugal announced that it had purchased 89.1% of the French nutrition company Diorren, which holds BCF, for €160 million.

In March, chemicals company Bondalti launched a OPA for the Spanish company chemicals firm Ecros to acquire 100% of its share capital in a deal that valued the company at €329 million.

The paper and paper paste giant The Navigator Company also launched an OPA for 100% of UK tissue company Accrol valued at €150 million.

“There seems to be an increasing trend for large Portuguese companies to look at opportunities overseas,” João Vaz, a EY partner in Strategy and Acquisitions told the business daily.

The consultant said that although the investments were on a smaller scale and therefore less risky than large buyout deals seen in other countries, they were relevant nonetheless as Portuguese companies look for new markets and platforms to distribute their products.

Vítor Madeira, a broker for XTB points out that some companies have made the most of extraordinary windfalls on the back of inflation seen in recent months, using the profits to invest in companies that are less capitalised. However, he was cautious not to rush to the conclusion that it was a general trend for Portuguese companies to make acquisitions overseas.

He also added that this type of acquisitions required healthy bank balances at a time when corporate borrowing is more expensive than it had been in the era of cheap money before the Covid-19 pandemic when interest rates were low and borrowing was financed on the back of debt.

An exception is the Portuguese renewables company Greenvolt led by João Manso Neto which issued €100 million in green 5-year bonds sold to 2,914 investors to expand overseas acquisition ambitions and then followed it up this year by issuing a further €75 million in bonds to expand in European markets including Romania and the UK.

Recent deals have included Sonae paying €700 million for 80% of Finnish pet store chain Musti, Bondalti’s (José de Mello Group) €330 million bid for Ecros, Navigator’s €150 million takeover of UK’s Accrol, in which the three companies spent €1.3Bn all told in acquisitions.