Grupo Éxito: market expects Gilinski’s second offer – Business – Economy

This week the door was opened to what could be another of the most important deals of the year. The French Casino group put its assets in Latin America up for sale, which includes Success stores.

You can also read: Brazilian company rejects Gilinski’s offer for Éxito, considering it too low

Although an interested party appeared in 48 hours, less time took the Brazilian Distribution Company (GPA) —which controls the majority of the shares of Éxito— in rejecting the offer, considering that it does not reflect the real value of the company. Last Monday, GPA, a subsidiary of Grupo Casino, announced that selling Almacenes Éxito is a way out to reduce its million-dollar debts —at the end of 2022 they were 6,400 million euros— and guarantee its economic sustainability.

The first to show interest in this business was the businessman Jamie Gilinsky, who will soon be the majority shareholder of Nutresa, together with his family and his partner from the United Arab Emirates IHC Capital Holding.

Also read: “We must prevent monopolies”: Ministry of Finance after Gilinski’s intention to buy Éxito

It offered 836 million dollars in cash for 96.52 percent of the shares —without a control premium—, but GPA assured that this proposal “does not reflect adequate financial ratio parameters for a transaction of this nature.”

Experts agree that gilinski He tries to “fish in troubled rivers” and launched this low offer, not because he believes that the company is worth little, but because he knows that the owner of Éxito is in a difficult situation due to his debts and is looking for liquidity.
“What he tried was to offer a price to test the ground and the need for Grupo Casino to accept the transactions. It is not ruled out that this is not the only offer that is going to be made”, says Jahnisi Cáceres, an equity analyst at Acciones y Valores.

Indeed, market sources assured EL TIEMPO that Gilinski does not rule out presenting a new offer, since he was awaiting the reaction of GPA’s share in Brazil to make the respective analysis. And it is that the action of GPA rose 2.46 percent in the day of last Friday, after it was known that he rejected this initial proposal. Analysts explain that this increase is due to the fact that they are waiting for a counter offer from the businessman.

How much can you co-star?

Cáceres points out that Éxito could be worth about 7 trillion pesos (1.6 billion dollars) if its book value is taken into account, which is approximately 5,450 pesos per share.

But if the price of its share on the Colombian Stock Market of 4,196 pesos per share (close last Friday) is taken into account, the total value of Éxito could be around 5.4 trillion pesos.

For Martha Juliana Silva, president of Silk Investment Banking, —taking into account similar transactions in the United States, Europe and Brazil—, the value of Éxito must be close to ebitda multiplied by eight times, and not by five as reflected in the offer by Jamie Gilinsky.

According to César Tamayo, dean of the School of Finance, Economics and Government at Eafit University, determining the real value of the company involves considering many variables.

The most important are related to the future of the company, that is, the forecasts of how much its revenue and margin will grow. In particular, it is key to consider free cash flow and the cost at which the company can raise capital or financing.

The academic mentions that there are also strategic considerations that a potential buyer takes into account: how do the assets and competitive position in the sector complement or strengthen the potential buyer? What level of future risk does the sector in which the company to be acquired is located face?

Additionally, aspects such as the size of the company, the products it offers, its financial performance, market position, legal issues and the size of annual sales must be taken into account.

Other experts also comment that the value of the company can go up or down depending on what happens with the retail trade sector, which is being threatened by new technologies, and the political situation in the country, because if there are complications, no investor will bet on a business that depends so much on Colombia.

Even in the profits of 45,118 million pesos reported in the first quarter of the year, the slowdown of the economy, high inflation and higher interest rates were reflected, since the drop was 30 percent compared to the same period of the year. past.

Taking these estimates into account, the experts mention other possible buyers besides Jaime Gilinsky. The Stocks and Securities analyst states that the threat posed by the covid-19 pandemic on food health aroused the interest of large private equity funds to acquire companies of this type.

He says that among those interested could be Cencosud (owner of Easy, Metro and Jumbo) and some as funds CDR, PAI, BFG Nutrition Fund and Auchan“bearing in mind that they have been carried out in recent years around companies that have a profile similar to Éxito”.

Market sources also express that there is a greater possibility that an investment fund will stay with Éxito to later sell its different businesses separately and thus obtain more profits, since it is a more financial operation.

But César Tamayo affirms that this would be possible if they are accompanied by a partner who knows one or more of the sectors in which Grupo Éxito is involved, because “it is not a minority or passive participation, but more than 90 percent participation , which requires control and direction”.

In Colombia it would be a bit more difficult to find potential buyers considering how big Éxito is in the retail sector. However, experts do not rule out that the owners of Alkosto, Ara or D1 They may also show some interest, but the offer could be less than the company’s value because the financial risk is high.

If the purchase is made by a company that already has a large presence in the country, it is very likely that it will be conditioned by the Superintendence of Industry and Commerce to avoid dominant positions in the market. In other words, it has to put some assets up for sale, as happened to Éxito in 2010, when it took over the Cafam supermarkets. The Superindustry will surely sell four Cafam supermarkets, two Carulla supermarkets and one Surtimax to reduce its market share and not generate significant restrictions on competition.

If GPA receives an attractive offer, the closing of the operation could take several months. According to the president of Silk Banca de Inversión, if everything moves quickly, it would be about eight months, otherwise it could take up to a year.

What’s for sale

Grupo Éxito is more than stores and supermarkets. It has large investments not only in retail, but also in the real estate sector (Viva Malls) and in the financial sector (Tuya). It is present in 23 departments of Colombia with 515 stores that operate under its brands Success, Carulla, Surtimax and Super Inter, among other. In addition, he has a presence in Uruguay and Argentina.

In 2022, Almacenes Éxito positioned itself as the sixth largest company in sales throughout the country, after Ecopetrol, Reficar, Terpel, Cerrejón and Drummond. In fact, it is the first largest company in sales that is not related to the hydrocarbons and mining sector.

It sold 15.1 billion pesos, an increase of 16.1 percent compared to 2021, and reported a profit of 99,000 million pesos, although it fell 79 percent. According to figures revealed by the superintendency of companiesits assets were 14.8 trillion pesos, its liabilities totaled 7.6 trillion pesos, and equity reached 7.2 trillion pesos at the end of 2022.

Among the 1,000 largest companies in the country, there are 17 companies in this sector and Almacenes Éxito represent 26 percent of total sales. The profitability of its assets, which is earned for each peso invested, was 1 percent, equal to that of the group of companies in its segment.

LINA QUIROGA BLONDE
Writing Economy
deiqui@eltiempo.com