J&F Investimentos gives up Havaianas control

J&F Investimentos has agreed to sell a controlling stake in Havaianas flip-flop maker Alpargatas to the investment firms of Brazil’s most prominent banking families for 3.5 billion reals (US$1.1 billion), according to securities filings.

Under terms of the deal, Cambuhy Investimentos, Itausa Investimentos and the fund Brasil Warrant will split J&F’s 86 per cent stake in Alpargatas, the filing said. Both had bid 3.3 billion reals for Alpargatas before talks appeared to have collapsed, reports Reuters.

It is the first sale by J&F, the holding company overseeing the fortune of Brazil’s billionaire Batista family, since it was hit with a record-setting fine linked to a corruption investigation, reports CNBC. Proceeds from the sale will help repay J&F’s debt and speed up payments on the 10.3 billion-real fine, insiders say.

Sao Paulo-based Alpargatas makes Havaianas flip flops, favoured by celebrities. The company also manages a swathe of Brazilian fashion brands including Osklen beachwear.

Itausa oversees the fortune of the Villela and Setubal families, who control Itau Unibanco Holding, Latin America’s largest bank by assets. Cambuhy is the family office of Brazil’s billionaire Moreira Salles family, also a major Itau shareholder.

Insiders say J&F’s owners Joesley and Wesley Batista will use proceeds from the transaction to repay a 2.7 billion-real acquisition financing loan they took with state-controlled lender Caixa Economica Federal. The loan is under investigation by Brazil’s audit court TCU for potential irregularities.

The brothers signed a leniency deal in May after admitting to bribing almost 1900 politicians to obtain cheap government loans for their businesses.

The Batistas had acquired Alpargatas in December 2015 from construction conglomerate Camargo Correa, which was ensnared in the same scandal, dubbed “Operation Car Wash”. As well as the Caixa loan, the Batistas will also have to pay for financing they took to buy out minority shareholders.

Other J&F-controlled assets up for grabs include a dairy company and a pulp manufacturer.