Netshoes Shareholders Approve Sale of Company to Magazine Luiza

By Xiu Ying

RIO DE JANEIRO, BRAZIL – The shareholders of Netshoes, a company specializing in the sale of sporting goods through the Internet, agreed at a meeting on Friday, June 14th, to accept Magazine Luiza’s offer for the acquisition of control over the company, with the concurrence of 90.32 percent of shareholders.

As a result of the decision, the sale of Netshoes will be carried out at a value of US$3.70 per share, the equivalent of approximately US$114.9 million (about R$448 million, considering the dollar exchange rate at R$3.90).

The amount is far greater than the initial offer made by Magazine Luiza, which had made a proposal of US$87 million and eventually increased the amount twice more after retail group SBF, owner of the Centauro store chain, entered the dispute.

The figure, however, is almost 10 percent less than the last offer by Centauro, of US$4.10 per share, or approximately US$127.3 million.

The report on the outcome of the meeting states that it hopes to complete the merger with Magazine Luiza by June 19th. Netshoes shareholders will receive a cash payment of $3.70 for each common share held.

On Thursday night, the Netshoes board of directors decided to uphold the decision to select Magazine Luiza’s proposal, reporting that they were unable to assess Centauro’s new offer in time and that a delay in deciding on the matter could be risky, given the uncertainties linked to the transaction being approved by competition and regulatory bodies, at a time when the company is experiencing severe cash restrictions.

Around 1 PM on Friday, June 14th, the shares of Magazine Luiza showed an increase of 2 percent, among the main hikes in the Ibovespa, which fell by 0.25 percent. Netshoes’ shares in New York fell 2.6 percent, in line with Magazine Luiza’s winning offer. Centauro’s shares were down 1.7 percent.