Exito dividends are another key factor - ~BRL400mn in dividends are expected ahead of the transaction (likely in Q1 2023), supporting the GPA Brasil deleveraging process. This comes in addition to the projected ~BRL2bn influx from the Extra Hiper receivables and another ~BRL1bn from the Extra Hiper installment by year-end.

The key hurdle from here is Board approval, following which completion is expected in H1 2023.Ĭompanhia Brasileira de Distribuição Value Unlocking Potentialįirst off, the transaction should accelerate the achievement of CBD's deleveraging targets. As the spinoff will not involve material costs, the current guidance is for no capital gains/losses for CBD. Per the transaction terms, the company will split Exito shares by three and deliver them at a four-to-one ratio to shareholders for every CBD share owned at book value.

This spinoff comes on the heels of prior spinoff and re-IPO exercises involving Via Varejo (a durables retail business) and, more recently, the listing of Assai (cash & carry business previously under the CBD banner) on the Bovespa. Net, a spinoff should catalyze significant value unlocking, clearing the path for the remainco valuation to converge with global peers.ĬBD recently disclosed its intention to reduce its stake in Exito to ~13% (from the current ~96%) via the distribution of Level II Exito Brazilian Depositary Receipts (BDRs) and American Depositary Receipts (ADRs) to shareholders.įor context, GPA currently owns ~96% of Exito, which is listed on the Colombian stock exchange (albeit with limited free float and liquidity). Exito currently trades at a ~R$5.5bn (or ~$1bn) market cap - a premium to the ~R$5.4bn (~$1bn) equity valuation for the whole of CBD (including its ~96% stake in Exito). More importantly, a spinoff will shed light on Exito's underlying value, which has been clouded by the intrinsic holding discount priced into CBD's market cap. Given the limited synergies with the rest of the CBD portfolio (which is run independently), this move should be well-received by investors.

Coming on the heels of a preliminary announcement in August, Companhia Brasileira de Distribuição ( NYSE: CBD) has finally decided to move ahead with spinning off its stake in Colombian retailer Exito.

Casino stake in exito