Regulatory News:
Carrefour (Paris:CA):
Grupo Carrefour Brasil (“Carrefour Brazil”) has entered into an
agreement with Advent International and Walmart for the acquisition
of Grupo BIG Brasil SA (“Grupo BIG”), Brazil’s third-biggest food
retailer. This acquisition strengthens Carrefour Brazil’s presence
in this high growth potential market. It will allow it to offer
Brazilian consumers a broader range of products and services at
more competitive prices.
The transaction values Grupo BIG at an enterprise value of
R$7.0bn1 (c.€1.1bn). This acquisition offers significant synergy
potential from year one, rising gradually to represent a net
additional contribution to EBITDA of R$1.7bn (c.€260m) on an annual
basis three years after the closing of the transaction.
Combined, the two groups have gross sales of about R$100bn,
operate 876 stores and employ around 137,000 people. Present in
Brazil since 1995, Grupo BIG operates a multi-format network of 387
stores and generated R$24.9bn gross sales (R$21.7bn net sales) and
R$928m adjusted EBITDA in 2020. Carrefour Brazil, which has been
present in the country since 1975, operates 489 stores and
generated R$74.7bn gross sales (R$67.6bn net sales) and R$5.6bn
adjusted EBITDA in 2020.
Alexandre Bompard, Chairman and CEO of Carrefour Group,
declared: “Our Group is on the offensive: The acquisition of
the BIG Group is a major transformation movement for Carrefour
Brazil. In this continental country with immense development
prospects, we have accentuated our leadership in the food
distribution market over the past 3 years, and BIG will further
strengthen it with very complementary formats and locations. The
transaction fits perfectly into the Carrefour Brazil ecosystem and
into the Group's acquisition strategy, centered on the
consolidation of our key markets. The significant synergies
generated by this transaction are a lever for creating additional
value and a powerful addition to the profitable growth model that
we have established across our Group."
***
Strategic rationale
The acquisition of Grupo BIG strengthens Carrefour’s leadership
in Brazil. The two groups offer strong geographic complementarity,
and the transaction will expand Carrefour Brazil’s presence in
regions where it has limited penetration, such as the Northeast and
South of the country, and that offer strong growth potential.
The acquisition allows Carrefour Brazil to expand in its
traditional formats, notably Cash & Carry (Maxxi banner) and
hypermarkets (BIG and BIG Bompreço banners), while extending its
footprint in formats in which it has a more limited presence, in
particular supermarkets (Bompreço and Nacional banners) and
proximity stores (Todo Dia banner). In addition, Carrefour Brazil
will operate in a new market segment with the Sam’s Club format,
through a license agreement with Walmart. This unique and highly
profitable premium business model is based on a membership system,
with over 2 million members.
The combination of the two groups will enrich Carrefour Brazil's
ecosystem of products and services, which currently serves over 45
million customers. Grupo BIG’s broad base of customers will become
part of the Carrefour Brazil ecosystem and benefit from the
complete experience of an omnichannel environment. They will
notably have access to an extended e-commerce offering, as well as
to Banco Carrefour’s payment and credit solutions, which will be
made available in all stores.
Synergies
The R$1.7bn expected synergies on an annual basis notably
include:
- Gains related to higher sales density and alignment of margins
to quickly increase store profitability. Those gains will
materialize after the conversion of stores to the Carrefour and
Atacadão banners, which have the best commercial offer in their
respective segments;
- Revenue related to the offering of Banco Carrefour's financial
services within the new store scope, leveraging Carrefour Brazil’s
unique value proposition (credit cards, digital wallet, B2B payment
terminals and credit);
- Growth acceleration of Carrefour Brazil’s digital offer (food
and non-food e-commerce, marketplace B2C and B2B, partnerships for
last mile delivery, etc.) through Grupo BIG’s customer base and its
store network;
- Optimization of overhead costs and indirect expenses and
enhanced supply chain efficiency.
Transaction structure
The acquisition will be realized 70% in cash and 30% through
newly issued Carrefour Brazil shares. Upon completion of the
transaction, Carrefour Group will own around 67.7% of Carrefour
Brazil (vs 71.6% today), Península Participações 7.2% and Advent
International and Walmart, through affiliates, 5.6% combined.
Benefits for Brazilian
stakeholders
For more than 45 years, Carrefour Brazil has been working and
investing so that millions of consumers can have the best product
assortment and services in Brazilian retail. Including this
transaction, Carrefour Brazil will have invested over R$15bn since
2019, directly contributing to the country's social and economic
development, notably through the creation of thousands of new jobs
and new business with local producers.
Carrefour Brazil plans to optimize the store network by
converting Maxxi stores to its Atacadão banner. The company also
expects that certain BIG and BIG Bompreço stores will be converted
to the Atacadão or Sam’s Club banners, with the remaining stores
converted to the Carrefour hypermarket banner. Customers will thus
be able to benefit from Atacadão and Carrefour's offer, as well as
from the Group’s commitment to make accessible to all quality and
healthy food. The acquisition will also allow the company to offer
the best prices to Brazilian families, small grocery stores and
restaurants.
Next steps
The transaction remains subject to the authorization of the
Brazilian antitrust authority (CADE), to the approval of Carrefour
Brazil’s shareholders, as well as other customary closing
conditions. The completion of the transaction is expected in
2022.
About Grupo BIG
Present in Brazil since 1995, Grupo BIG (formerly Walmart
Brazil) operates a multi-format network of 387 stores, comprising
35 membership-only stores under the Sam's Club banner, 107
hypermarket stores under the BIG and BIG Bompreço banners, 99
supermarket stores under the Bompreço and Nacional banners, 97 soft
discount stores under the Todo Dia banner, 49 Cash & Carry
stores under the Maxxi banner as well as 13 gas stations. Grupo BIG
has a presence in 19 states, with a larger footprint in the
southern and northeastern regions of Brazil. In 2020, Grupo BIG
generated gross sales of R$ 24.9 billion and adjusted EBITDA of R$
928 million.
About Carrefour Brazil
Carrefour Brazil operates 489 stores in Brazil, including 100
hypermarket stores under the Carrefour banner, 53 supermarket
stores under the Carrefour Bairro and Market banners, 130 proximity
stores under the Carrefour Express banner, 206 Cash & Carry
stores under the Atacadão banner, as well as 125 pharmacies and 77
gas stations. In 2020, Carrefour Brazil generated gross sales of R$
74.7 billion and adjusted EBITDA of R$ 5.6 billion.
About Carrefour Group
With a multi-format network of some 13 000 stores in more than
30 countries, the Carrefour Group is one of the world's leading
food retailers. Carrefour recorded gross sales of €78.6 billion in
2020. It has more than 320,000 employees who help to make Carrefour
the world leader in the food transition for everyone, providing
everybody with access to high-quality, affordable food every day,
in all locations.
For more information, visit www.carrefour.com, or find us on
Twitter (@GroupeCarrefour) and LinkedIn (Carrefour).
APPENDIX 1 – 2020 key figures
Carrefour Brazil
Grupo BIG
Combined operations (pro
forma)
Gross sales, R$ bn
74.9
24.9
c.100
Net sales, R$ bn
67.6
21.7
89.3
Adjusted EBITDA (post-IFRS 16), R$ bn
5.6
0.9
6.5 +1.7 net synergies after 3
years
Store count
489
387
876
Employees
c.96,000
c.41,000
c.137,000
APPENDIX 2 – Grupo BIG pro forma simplified balance sheet at
December 31, 2020 (non-audited)
ASSETS
R$ bn
LIABILITIES
R$ bn
PP&E & right-of-use assets
6.4
Equity
8.7
Recoverable taxes & deferred income
taxes
5.5
Lease liabilities
2.2
Inventory
2.8
Provisions net of judicial deposits
1.6
Accounts receivable
1.5
Accounts payable
3.7
Net cash
0.5
Payroll, social charges & tax
payables
0.5
Other assets
0.7
Other liabilities
0.7
Liabilities
8.7
TOTAL
17.4
TOTAL
17.4
Grupo BIG owns the real estate for 181 of its stores (47% of its
total network) and 38 additional sites, which represent a total
real estate value of approximately R$7bn, according to an
independent appraisal.
APPENDIX 3 – Enterprise value
R$ bn
Equity value (pre-IFRS 16)
7.5
(+) Net debt / (net cash) as of
31/12/2020
(0.5)
(=) Enterprise value (pre-IFRS
16)
7.0
APPENDIX 4 – Other transaction terms
This payment is associated with a price complement based on
Carrefour Brazil’s share performance (Carrefour Brazil share
appreciation in R$ between signing and 6 months post-closing
multiplied by a factor of 20 million, as per the agreement).
The terms of the transaction include an upfront payment of
R$900m to the sellers by Carrefour Brazil, to be paid shortly after
signing. Such payment shall be deducted from the total transaction
amount upon closing.
DISCLAIMER
This press release contains both historical and forward-looking
statements with respect to the anticipated future performance of
Carrefour Brazil following completion of Grupo BIG's acquisition,
if completed. Certain information relating to Grupo BIG set out in
this press release has been prepared based on information provided
by Grupo BIG within the context of the acquisition process. These
financial figures have not been audited or reviewed by Carrefour
Brazil’s auditors. Combined financial data provided in this press
release has been neither audited nor reviewed by Carrefour Brazil’s
auditors.
These forward-looking statements are based on Carrefour
management's current views and assumptions. Such statements are not
guarantees of future performance of the Group. Actual results or
performances may differ materially from those in such
forward-looking statements as a result of a number of risks and
uncertainties, including but not limited to the risks described in
the documents filed by Carrefour Brazil with the CVM (Brazilian
Securities Commission) in particular its Reference Form or by the
Carrefour Group with the Autorité des Marchés Financiers as part of
the regulated information disclosure requirements and available on
Carrefour's website (www.carrefour.com), and in particular its
Universal Registration Document.
_____________________ 1 Before capitalized leases (IFRS 16) that
amount to $R2.2bn
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