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Brothers Joesley and Wesley Batista, owners of the holding J&F which controls JBS, are reported to have rejected the offer from Brazilian investors Cambuhy and Itaúsa for the purchase of footwear maker Alpargatas.
According to local reports, the Batista family did not accept the value offered for the asset, and decided to close the discussions. As reported by ILM, Cambuhy and Itaúsa would initially have offered between R$3.3 billion (US$1 billion) and R$3.5 billion (US$1.1 billion) for 86% of the common shares held by J&F. But, questioning Alpargatas' recent results, the investors wanted to pay less.
Cambuhy is said to have pressed to lower the value of the deal, taking advantage of the fragile period J&F is going through since the holding needs to raise US$10.3 billion to pay for the leniency agreement.
According to a survey by Brazilian analyst Economática, the market value of Alpargatas is currently R$6.5 billion (US$1.99 billion). The shares traded on the stock market are reported to have totalled R$2.2 billion (US$675 million). In November 2015, the Batista brothers purchased from Camargo Corrêa construction company 67% of the common shares (voting shares) of Alpargatas, for R$2.7 billion (US$829 million), increasing their share to the current 86% in September 2016.
According to analysts, Alpargatas is considered one of the best assets of the J&F. The footwear manufacturing Group reported a 36% increase in profit in 2016 and has a large presence internationally, especially with the Havaianas brand, which accounted for 16% of total sales and 23% of cash generation. Alpargatas also owns the Osklen brand.
As an asset out of the meat business, Alpargata’s sales is not subject to approval by CADE, Brazil’s Administrative Council for Economic Defence, as such is the case of JBS’ sale of its Mercosur assets to rival meatpacker Minerva. Read more here. However, given the sense of urgency for the sale, whoever proposed to buy Alpargatas will push to have a good discount, according to some analysts.
Source: Globo Extra