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Netshoes Amends Merger Agreement with Magazine Luiza
Friday 14 June 2019

14 June 2019 - Brazilian e-commerce sporting goods conglomerate Netshoes (Cayman) Ltd. (NYSE: NETS) has entered into a second amendment to an agreement and plan of merger by and among Netshoes, Magazine Luiza S.A. and its subsidiary to increase the per share merger consideration (as such term is defined in the merger agreement) from USD 3.00 to USD 3.70, and to increase the amount of that certain company Termination Payment (as such term is defined in the merger agreement) from USD 1.8m to USD 6m, the company said.
The amendment was executed after careful review and consideration, by the board of directors of Netshoes, of a revised unsolicited proposal from Grupo SBF S.A. for purchase of all of the outstanding common shares of Netshoes through a merger transaction pursuant to which Netshoes shareholders would receive a payment in cash of USD 3.70 for each share, and Magalu's proposed amendments to the merger agreement, as set forth in the amendment.
The Netshoes Board has unanimously approved (with the abstention of Marcio Kumruian on advice of counsel) the Amendment to the merger agreement and unanimously reaffirms its recommendation (with the abstention of Kumruian on advice of counsel) that Netshoes' shareholders vote in favour of the transactions contemplated by the Merger Agreement.
In reaching this determination, the Netshoes Board took into account the increase in the per share merger consideration; the high degree of certainty of the completion of the merger with Magazine Luiza on or prior to June 19, 2019 (subject to approval by the shareholders of the company); the final approval of the Magazine Luiza acquisition previously granted by the Brazilian antitrust authority; that any potential transaction between the company and Centauro would involve calling a new shareholders meeting and review by Brazilian antitrust authorities, leading to delay and uncertainty; and that it is in Netshoes' shareholders' best interest to secure a transaction with a closing just a few days away given the previously disclosed pressures on Netshoes operating cash flow and financial condition.
In light of the aforementioned, the board of directors determined that it continues to be in the best interest of the shareholders of Netshoes to vote in favour of the resolutions authorizing the merger agreement and for Netshoes to consummate the transaction with Magazine Luiza.
Date Published: 14/06/2019
Target: Netshoes
Country: Brazil
Deal Size: 109m (USD)
Sector: Wholesale/Retail
Type: LBO
Financing: Cash
Status: Bidding
Buyer: Grupo SBF S.A.
Bidding war with Magazine Luiza