Business

Brazilian retail platform Linx says it is still analyzing rival TOTVS's offer

At the same time, payments company Stone said it plans to issue BDRs if it wins the dispute over Linx

TOTVS headquarters in Sao Paulo
TOTVS headquarters in Sao Paulo. Photo: Aluísio Alves/Reuters
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  • According to TOTVS, there was no relevant evolution of the analysis, by the independent special committee made up of Linx’s board of directors, of the business combination proposal presented by TOTVS released on August 14;
  • TOTVS ‘proposal for Linx was made after Linx announced a binding agreement with StoneCo, which changed after the submission of a competing proposal by TOTVS.

The Brazilian retail management platform Linx said it continues to analyze the acquisition offer made by rival TOTVS, according to a regulatory document on Wednesday. On Tuesday, TOTVS said that Linx’s independent directors decided not to sign the Merger Protocol and Justification submitted by TOTVS, indicating that the retail platform was postponing the analysis of the offer. Payments company Stone said, in turn, that if it wins in the dispute for Linx, it intends to issue BDRs, which in practice would allow Brazilian investors to also bet on the new company, and allow Linx shareholders to receive BDRS from Stone.

According to TOTVS, there was no relevant evolution of the analysis, by the independent special committee made up of Linx’s board of directors, of the business combination proposal presented by TOTVS released on August 14. “This situation, after more than 5 weeks of access to the proposal, reinforces the perception that the maximization of value for Linx’s shareholders has not been the objective commitment of Linx’s special committee, formed by independent directors,” said TOTVS.

READ ALSO: Linx partners up with Rappi in malls and announces new tools to support retail

The company also assessed that the directors have only shown a willingness to delay, or even prevent, the appreciation of Totvs ‘proposal by the Linx shareholders’ meeting, as a way to force these shareholders to deliberate on a single proposal, that of Stone.

TOTVS ‘proposal for Linx was made after Linx announced a binding agreement with StoneCo, which changed after the submission of a competing proposal by TOTVS.

READ ALSO: Partnership with Mercado Livre is among Linx’s initiatives to help its portfolio amid the crisis

Stone said on Wednesday that it will seek to obtain the sponsored Level I sponsored Brazilian Depositary Receipts (BDRs) program, within the scope of the possible business combination with Linx, according to a statement by Linx to the Brazilian Securities and Exchange Commission (CVM).

“According to StoneCo, StoneCo’s Level I BDR program registration will result in company (Linx) holders receiving StoneCo BDRs as part of the StoneCo redemption price to be paid by StoneCo under of the Stone operation, “said Linx. In practice, BDRs are certificates representing shares of foreign companies traded in Brazil. A BDR program is an instrument for foreign companies to enter the Brazilian market. This will also allow Linx shareholders to receive BDRS from Stone as a form of payment in the transaction.

Translated from Portuguese to English by Fabiane Ziolla Menezes

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