J&F Investimentos gives up Havaianas control
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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.
Questions & Answers
Q.Which entities will now control the majority stake in Havaianas maker Alpargatas?
Which entities will now control the majority stake in Havaianas maker Alpargatas?
The investment firms Cambuhy Investimentos, Itausa Investimentos, and the fund Brasil Warrant will split J&F's 86 per cent stake. These firms are associated with prominent banking families in Brazil.
Q.Why is J&F Investimentos selling its stake in Alpargatas?
Why is J&F Investimentos selling its stake in Alpargatas?
J&F Investimentos is selling its stake following a record-setting fine linked to a corruption investigation. Proceeds from the sale will help repay the company's debt and speed up payments on this fine.
Q.What is the total amount J&F Investimentos is receiving for its controlling stake in Alpargatas?
What is the total amount J&F Investimentos is receiving for its controlling stake in Alpargatas?
J&F Investimentos has agreed to sell its controlling stake in Alpargatas for 3.5 billion reals. This amount is equivalent to US$1.1 billion at the time of the deal.
Q.How will the Batista brothers use the proceeds from this transaction?
How will the Batista brothers use the proceeds from this transaction?
The Batista brothers will use proceeds from the transaction to repay a 2.7 billion-real acquisition financing loan. This loan was taken with state-controlled lender Caixa Economica Federal and is currently under investigation.
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