(Update: comments from an analyst, clarification provided by a Carrefour spokesperson on the timing of the operation and stock market price)
PARIS (Agefi-Dow Jones)–The Brazilian competition authority has conditionally authorized the takeover of local distributor Grupo BIG by Carrefour, the Brazilian subsidiary of the tricolor group announced on Wednesday evening.
According to the concentration agreement established by the Brazilian regulator, Grupo BIG will have to sell at the closing of the transaction a total of 14 stores, which represents 3.6% of its store base at the end of 2021 and 6% of its revenue from last year.
This condition for the completion of the acquisition of Grupo BIG by Carrefour is less restrictive than that envisaged at the beginning of the year by the competition authority, which concerned the sale of around 10% of the store network. This is therefore “slightly positive” news for Carrefour, notes JPMorgan, which remains “neutral” on the Carrefour Brazil share and “overweight” on the Carrefour title.
Carrefour announced in March 2021 that it had reached an agreement with Advent International and Walmart for the acquisition of Grupo BIG, for an enterprise value of 7 billion reals, or 1.36 billion euros. The transaction should be settled in cash and shares of Carrefour Brazil.
The finalization of the transaction should take place “in the coming days”, a spokeswoman for Carrefour told the Agefi-Dow Jones agency.
The success of this acquisition would make Carrefour an undisputed leader in the Brazilian market. Its local assets and those of Grupo BIG offer strong geographical complementarity and will enable the French distributor to establish itself in a new market segment with the Sam’s Club format, via a license agreement with Walmart. This unique and highly profitable premium business model is membership-based, with over 2 million members.
“From now on, the emphasis can be placed on the integration of assets and the realization of the synergies announced, estimated at 2 billion reals”, or 388 million euros, adds JPMorgan. The synergies targeted will be achieved thanks to the increase in commercial density, the alignment of margins between the different brands, the optimization of central costs or even thanks to better logistics efficiency, assured Carrefour in the spring of 2021.
On the Paris Stock Exchange, the Carrefour title rose by 0.1% on Thursday, to 19.18 euros, while the Atacadao share (Carrefour Brazil) fell by 1.2% on Wednesday in Sao Paulo, to 19.59 reals. .
-Dimitri Delmond, Agefi-Dow Jones; +33 (0)1 41 27 47 31; [email protected] ed: LBO – ECH
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May 26, 2022 03:32 ET (07:32 GMT)