05/05/2021 – Acquisitions / Carrefour / Brazil / Brasil / Grupo BIG
Carrefour strengthens status in Brazil with acquisition of Grupo BIG
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.
The 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$7bn (US$1.25bn). Carrefour Group has said that it expects the acquisition to offers significant synergy potential from year one, rising gradually to represent a net additional contribution to EBITDA of R$1.7bn (around US$300m) on an annual basis three years after the closing of the transaction.
Combined, the two groups have gross sales of about R$100bn (US$17.8bn), 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.
Carrefour CEO: “We are on the offensive”
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 three 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, centred on the consolidation of our key markets,” he continued, adding that the “significant synergies” generated by this transaction (expected to come in at an estimated R$1.7bn annually) are “a lever for creating additional value and a powerful addition to the profitable growth model” established across the Group.
Expanding presence and format footprints
In a statement, the Group said the transaction would expand Carrefour Brazil’s presence in regions where it has limited penetration, such as the northeast and south of the country, 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 two 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 omni-channel 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.
The next steps
The acquisition will be realised 70per cent in cash and 30 per cent through newly issued Carrefour Brazil shares. Upon completion of the transaction, Carrefour Group will own around 67.7 per cent of Carrefour Brazil (vs. 71.6 per cent today), Península Participações 7.2 per cent and Advent International and Walmart, through affiliates, 5.6 per cent combined.
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.
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