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(Bloomberg) -- Carrefour SA offered to buy the shares it doesn’t already own in its Brazilian subsidiary, Atacadao SA, as the French grocer seeks paths to boost growth.
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Carrefour, which holds about two-thirds of the unit, bid 7.70 Brazilian reais for each of the remaining shares, Atacadao said Tuesday, a 19% premium to Monday’s closing price. The move confirmed an earlier report by Bloomberg News that Carrefour was working with advisers on a take-private of the unit.
Atacadao closed 10% higher at 7.10 reais on Tuesday, valuing the company at almost 15 billion reais ($2.6 billion). Carrefour was little changed early Wednesday in Paris.
“From the parent and French standpoint, it is a transaction that makes sense,” said Joseph Giordano, an analyst at JP Morgan. “Brazil is an interesting market from a top down perspective and Carrefour is the number one player while Brazil is a substantial earnings before interest contributor to the group.”
Giordano said the deal also “implies a huge belief on the Brazilian recovery longer term.” He added that financing the transaction will likely come at the expense of capital returns, such as buybacks, which could be the main investor pushback on the proposal.
Peninsula, the family office of the Diniz clan and Atacadao’s second-largest shareholder, intends to participate in the transaction. The proposal allows it to transform its shares in the Brazilian company into Carrefour stock, according to a separate statement. Peninsula owns about 7% of Atacadao, which went public in 2017, and holds about 8.8% of Carrefour.
Bloomberg News reported in November that Carrefour was in the early stages of studying ways to boost its valuation, more than three years after Canada’s Alimentation Couche-Tard Inc. abandoned talks to merge with the company.
At that time, Carrefour and Couche Tard were discussing an offer of €20 ($20.76) a share for the French grocer. The stock is now trading at €13.65.
--With assistance from Michelle F. Davis, Joel Leon and Angelina Rascouet.
(Updates with analyst comment in fourth, fifth paragraphs)
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