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Nov 23, 2015
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Brazil's J&F to pay $716 mln for Camargo Correa's Alpargatas stake

Nov 23, 2015

J&F Investimentos SA, the investment holding company of Brazil's billionaire Batista family, agreed on Monday to pay 2.67 billion reais ($716 million) in cash for the 44.1 percent stake that conglomerate Camargo Correa SA has in apparel and footwear maker Alpargatas SA.

J&F, which controls the Batista family's non-meatpacking assets, will pay 12.85 reais per common and preferred shares that Camargo owned in Alpargatas, according to a Monday securities filing. That represents a premium of about 32 percent over the closing price of Alpargatas shares last week.

Havaianas is an Alpargatas brand - Havaianas

The sale comes as Camargo Correa grapples with fallout from a corruption scandal at state-controlled firms, which were key clients of the conglomerate's engineering unit. The scandal blocked access to capital markets funding, forcing several engineering firms to dispose of assets to raise cash.

Camargo Correa decided to exit part or all of different business to create value for shareholders,and not out of a need to raise cash to cut debt or pay fines related to the scandal. The Alpargatas stake is the first of several asset sales Camargo Correa will attempt in coming months, sources with direct knowledge of the deal told Reuters this month.

For J&F, the acquisition of a controlling stake in Alpargatas means the Batistas are tapping clothing and shoe brands with increased global appeal such as Havaianas flip flops that are widely wore by celebrities. The Alpargatas deal also allows J&F to diversify investments, some of which are currently parked in the home cleaning, banking, paper and pulp and media industries.

While Alpargatas prefered shares fell 5 percent in early trade on Monday, common shares jumped 3.7 percent.

Brazilian markets were closed on Friday in observance of a holiday in São Paulo state.

The deal is subject to regulatory approval and will require J&F to launch a formal offer, the filing added.

Should the deal fails to be concluded within the next 60 days, the final price will be adjusted by the benchmark interbank CDI rate, the filing added. Under terms of the deal, J&F agreed to keep Alpargatas listed for at least the first year after the acquisition of Camargo Correa's stake.

News magazine Exame reported the transaction earlier in the day, without saying how it obtained the information.

Reuters reporteed earlier this month that potential bidders for the Alpargatas included private equity firms Gávea Investimentos Ltda and Apax Partners LLC, as well as rival footwear producer Grendene SA.

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