Aliansce (ALSO3) proposes merger “between equals” for brMalls (BRML3)

In a notice to the market, Aliansce Sonae (asset=ALSO3]) reported having sent a non-binding proposal for a business combination to the Board of Directors of bRMalls Participações ([asset=BRML3)[ativo=BRML3)

“Aliansce Sonae understands that this merger of equals has the capacity to strengthen the combined company’s business, taking advantage of the talents and best practices of each of the companies, creating a unique opportunity to generate value for shareholders. In addition, it should generate numerous opportunities for growth, with significant gains for all its stakeholders, especially by investing to improve the experience of its customers,” the company said in the statement.

Aliansce also highlights that, to date, there is no agreement signed or formal acceptance regarding the business combination object of the proposal and that it will keep its shareholders and the market in general informed.

Under the terms of the proposal, sent on the 4th to the brMalls Board, brMalls shareholders will receive BRL 1.35 billion in cash (BRL 1.70 per share) – equivalent to 20% of the company’s market value currently – and will own 50% of the new company, receiving 265,013,405 new common shares issued by Aliansce, thus forming what would be the biggest player in malls in Latin America. These terms led Aliansce Sonae to define the operation as a “merger between equals”.

In the merger of brMalls by Aliansce, 80% in shares and 20% in cash, the exchange ratio gives brMalls shareholders a 13% premium over Aliansce’s multiple.

Aliansce stated that it is convinced that the intended operation represents an excellent opportunity to create
value, which will result in significant gains for the shareholders of both companies and, in particular, which will further enable the transformation of the retail and shopping mall sectors through the strengthening of the combined company.

“In addition, the operation will allow for more robust investments to keep our assets up to date and the development of business strategy in a ‘phygital’ environment, a fundamental condition to maintain our competitiveness in the long term”, he points out.

The strategic vision is mainly based on: (i) the capacity and excellence of the talents of both companies, (ii) the complementarity and quality of the combined portfolio, (iii) ALSO’s successful track record in implementing transformational combinations in our industry , and (iv) in the support of a group of reference shareholders with a long-term vision and with extensive knowledge of retail and shopping centers on a global scale, highlighted Aliansce.

“ALSO’s and brMalls’ history of success, despite the recent unfavorable conditions of the Brazilian economy and public health, confirms our conviction regarding the significant growth potential of the combined company. Together, ALSO and brMalls will be able to allocate their talents, efforts and a greater volume of resources to the development and expansion of their operations nationwide, for the benefit of all stakeholders, providing greater returns to shareholders and offering better and more complete services to customers. customers of the two companies”, pointed out the company.

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She also adds that, given all the positive aspects of the operation, she is convinced that the business combination will generate value for the shareholders of both companies.

Together, the two companies can add up to a portfolio of 69 malls with joint tenant revenues of R$38.5 billion, according to the presentation released with the material fact. The merger would also make it possible to capture financial synergies of up to R$49 million and an additional R$161 million in the operational part per year.

Aliansce assesses that mall managers have a high “complementarity” of geographic portfolio and operating segment, with a combined share of 14.2% of the so-called commercial GLA (gross leasable area).

The offer is valid until the 2nd of February.

The news that Aliansce Sonae would be studying a proposal by brMalls started at the end of December. On the occasion, Bradesco BBI highlighted that the possible operation tends to be a win-win operation for the companies, “with a lot of strategic sense”.

In a short note after the presentation of the terms of the proposal, Credit Suisse pointed out that, without a significant premium for brMalls shareholders, the focus should be on synergies, estimated at around R$ 210 million per year.

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