Written by Alberto Allergi
SAO PAULO (Reuters) – Shares of Brazil’s Pets Inc rose on Friday after the company formally agreed to merge with rival Copasi to create the country’s largest pet products retailer.
The merger agreement was first announced in April, when the two companies signed a memorandum of understanding regarding the merger that has now been confirmed.
Shares of Bates, which trade on the Sao Paulo stock exchange, rose about 29.5% after the announcement, making it the biggest gainer by midday on the benchmark stock index, which was almost flat.
“We believe there is skepticism in the market about whether the deal will actually happen,” said analysts at JPMorgan led by Nicholas Larin, describing the deal as positive although they noted that some of the terms had been “revised downward.”
Under the agreement, Betz will become a subsidiary of Copasi and its shareholders will receive 52.6% of the combined company, which will be listed on the Novo Mercado segment of the São Paulo Stock Exchange with stricter governance rules.
Betz shareholders will also receive 400 million reais ($73 million) in cash, including 130 million reais to be distributed as an exceptional dividend before the deal closes, the company said in a securities filing.
“This compares to the initial figure of R$450 million,” JPMorgan Chase noted.
The new company is expected to generate total annual revenues of R$7 billion from 494 stores in more than 140 cities. The merger still requires approval from Brazil’s antitrust authority, which the companies expect to receive in 2025.
Annual synergies are expected to reach between R$220 million and R$330 million in additional underlying earnings (EBITDA), Betz and Copasi said.
The new company will have nine members on the board of directors, five of whom will be appointed by Copasi’s auditors and four of whom will be appointed by Betz’s reference shareholder Sergio Zimmermann, who will serve as chairman of the board. Copasi’s founder, Paolo Nassar, will be appointed CEO.
(1 dollar = 5.4703 riyals)
Comments are closed, but trackbacks and pingbacks are open.