06/09/2009 10h17

Pão de Açucar buys Ponto Frio and resumes retail leadership

DCI

The Pão de Açucar Group closed the purchase of Ponto Frio in the early hours on Monday and became the largest Brazilian retailer - overcoming the rival Carrefour - with an income of R$ 26 billion (US$ 12.4 billion), 79 thousand employees and more than one thousand stores spread out through 18 States. After having announced it was not interested in the acquisition, the group headed by Abílio Diniz excelled the retail chain deemed favorite on the acquisition of the company, like Magazine Luiza and Lojas Insinuante, leader in the Northeast region. The transaction includes the 455 physical stores of Ponto Frio, the virtual store, the participation in the financing company Investcred and distribution centers.

In order to close the greatest deal in the history of the Brazilian retail in number of stores and income, Pão de Açúcar paid R$ 824.5 million (US$ 392.6 million) for the 70.2% participation of the controllers in the total capital of Globex - Lily Safra and her stepson, Carlos Monteverde. R$ 373 million (US$ 177.6 million) of this amount was paid in cash, with own funds of the company. The other $ 451 million (US$ 214.8 million) will be paid by stock swap.

The stock swap freed Pão de Açucar from getting into debt to make the acquisition. It brought, however, one inconvenience: should such stocks be sold quickly, they would cause the securities of the group to fall down. In order to prevent that, the solution was to determine the stocks can only be sold in stages: 6 months, 12 months and 18 months. If the stocks gain value in the period, Lily Safra will profit. If they fall, it guarantees a profitability in the period equal to the bank interest, the CDI. The agreement was handled by the office of mergers and acquisitions Estáter, owned by Pércio de Souza, and by the Souza lawyer's office, Cescon on the side of Pão de Açúcar, and Goldman Sachs and Mattos Filho, on the side of Ponto Frio.

For the minority stockholder that represent 29.8% of the company's capital, Pão de Açúcar will make a public offering for the purchase of the stocks for 80% of the price paid to the controllers. In case the deal is accepted by the entirety of the minority stockholders, Pão de Açúcar will disburse RS$ 1.164 billion (US$ 554 million) for the purchase of Ponto Frio, calculates the administrative and financial vice-president of the group, Enéas Pestana.