Business

Carrefour acquires smaller rival Grupo Big for BRL 7.5 billion

Advent and Walmart will sell Brazil's third-largest food retailer, the transaction will be in cash and shares

Photo: REUTERS/Paulo Whitaker
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  • Grupo BIG owns 181 stores (47% of the total) and 38 extra properties;
  • It will expand the presence of the Brazilian unit of the French group in regions such as the Northeast and the South of the country.

French grocery group Carrefour announced on Wednesday an agreement for the acquisition of its rival Grupo BIG, Brazil’s third-largest food retailer, for BRL 7.5 billion. It will expand the presence of the Brazilian unit of the French group in regions such as the Northeast and the South of the country. The operation considered an enterprise value estimated at BRL 7.015 billion.

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Grupo BIG owns 181 stores (47% of the total) and 38 extra properties, totaling approximately BRL 7 billion real estates, according to an independent analysis cited in a relevant fact about the business.

“The complementarity of the two groups will enrich the ecosystem of products and services of Carrefour Brasil, which currently serves more than 45 million customers, and will expand its customer base with the addition of more than 15 million customers of the Grupo BIG,” according to the company.

In the document, Carrefour Brasil said it has identified significant synergy potential since the first year, gradually increasing to represent an more net contribution to the operating result measured by Ebitda of BRL 1.7 billion annually, three years after completion.

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The acquisition “marks a major step in our development, expanding our geographic presence in certain states, expanding our operations in formats, besides to adding a very promising model that we do not yet operate – Sam’s Club“, said the CEO of Carrefour Brasil, Noël Prioux, in a statement.

The deal – share purchase, the merger agreement, and other covenants – was entered into between Carrefour Brasil, Advent International Corporation, and Brazil Holdings S.C.S – a company controlled by Walmart.

The transaction structure provides that Carrefour Brasil will acquire, through purchase and sale, common shares representing 70% of the Grupo BIG’s share capital for BRL 5.25 billion, in cash and, after approval by shareholders, incorporation of shares ordinary shares representing the other 30%.

Within the scope of the merger of shares, each common share issued by BIG will be replaced by shares of Carrefour Brasil, with a total of 116,822,430 shares being issued, which cannot be transferred by the sellers for up to 6 months.

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Carrefour Brasil has agreed to make an advance of BRL 900 million, which will be deducted from the final total amount of the transaction when it is completed.

As soon as the transaction is completed, the Carrefour Group will hold a 67.7% stake in the Carrefour Brasil Group (compared to 71.6% today) and Península Participações will have 7.2%, while Advent and Walmart, through affiliated entities, will have 5.6% together.

(Translated by LABS)

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