Reorganization of Via Varejo and Cnova Brazil operations 8 August 2016

Transcription

1 Reorganization of Via Varejo and Cnova Brazil operations 8 August

2 Disclaimer The forward-looking statements in this presentation are based on current assumptions and projections of the Company's management, which could differ materially from actual results and performance and future events. These projections include future results that could be influenced by historical results and investments. Actual results, performance and events may differ significantly from those expressed or implied by these forward-looking statements due to a variety of factors, such as general economic conditions in Brazil and other countries, interest and exchange rate variations, future renegotiations or prepayment of obligations or loans denominated in foreign currency, legal and regulatory changes and general competitive factors at the regional, national or global levels. 1

3 Overview of the transaction TRANSACTION HIGHLIGHTS CURRENT STRUCTURE Reorganization: the Cnova Brazil operations will be integrated into Via Varejo to create the leading Brazilian omni-channel non food retailer As transaction consideration, Via Varejo will deliver to Cnova N.V. (i) the shares held by Via Varejo in Cnova N.V. (21.9% stake) and (ii) an amount of BRL16m No change in the shareholder structure of Via Varejo no dilution to existing shareholders Free float (2) 43.3% 26.6% 21.9% 8.1% 99.8% 100.0% Cnova Brazil (1) VALUATION CONSIDERATIONS FINAL STRUCTURE Equity value: Cnova Brazil: BRL1,602m 99% stock of Cnova N.V. and 1% cash consideration Assessing Cnova Brazil value: Enterprise value: BRL2,697m Implied sales multiples: 55.4% % (0% to 100% tender to offer) 34.0.% Cnova Brazil Free float (3) 10.3% - 0% (0% to 100% tender to offer) 2017e: 0.43x 2018e: 0.35x (1) Held by GPA (43.3%), the Klein Family (27.3%) and free float (29.3%); (2) Including 1.4% stake held by founders (1.9% post shares cancellation), (3) 0.15% of Cnova initially held by Exito would be 0.19% post shares cancellation Private company Listed company X% Economic interest 2

4 A transaction with strong strategic rationale for Via Varejo Creation of the leading integrated omni-channel player in Brazil with increased competitiveness and flexibility of a model combining Brick & Mortar and e-commerce propositions in an industry in flux Sizeable identified synergies leveraging the various strengths of the combined entity: logistics, commercial, working capital and cost synergies Improving the growth prospects and profitability of Via Varejo with limited impact on balance sheet 4 Simplifying business management going forward 5 Highest corporate governance standards, led by independent committees and final approval by minority shareholders 3

5 1 Creation of the leading integrated omni-channel player in Brazil A leading omnichannel retailer in the Brazilian nonfood sector Creation of the leading non-food Brick & Mortar and online integrated retailer in the Brazilian market with BRL26-28bn in sales 1 Strengthened business profile, with full sales force alignment and the creation of a seamless Click & Collect network Better positioned for the long-term trend of the retail industry with strengthening of online and mobile channels Unified commercial strategy regarding product offering, pricing, promotion and retail channels Enhanced customer experience increasing satisfaction, loyalty, and advocacy Reorganized e- commerce business with high potential for value creation Benefit from a sound industrial logic and synergies by reorganizing operations in Brazil Enhance business model to better address a challenging environment Better positioned to calibrate sales and margins vis-à-vis Brick & Mortar and online channels Reduce reverse logistic costs and complexity associated with online transactions by allowing returns at the physical points of sale Integrated player with enhanced competitive advantage Omni-channel model providing not only increased competitiveness in each single channel, but also a true multichannel proposition in tune with secular market trends Brick & Mortar model, with established store network and large existing customer base Internet model, providing higher growth prospects going forward Combined advertising strategy increasing effectiveness of expenditures Increased customer base to offer financial services (1) Estimated for

6 2 Sizeable expected synergies leveraging the strengths of the combined entity Synergies Implementation of initiatives Expected realization (1) One-time Run-rate (2) Working capital synergies Reduction of all overlapping inventories leading to a reduction of working capital financing need Supply chain / Logistics synergies Freight cost efficiency Optimized sourcing Distribution centers mutualization Rationalized organization Sales synergies Click & Collect acceleration Out-of stock reduction Omni-channel advertising benefits Introduction of in-store kiosks Inventory optimization: Full implementation until end of 2016 Financial impact: As soon as inventory optimization is implemented Full implementation until end of 2016 Click & Collect : Full implementation until end of 2016 Out-of-stock reduction Combined, optimized advertising Omni-channel: Since day-one Kiosks introduction: During 2017 One-time impact from inventory optimization expected until end of 2016 Run-rate achieved in 2017 for financial impact Run-rate achieved in 2017 Run-rate achieved in 2017 for Click & Collect, out-of-stock and advertising Run-rate achieved in 2018 for in-store kiosks BRL c.325m BRL c.245m Costs synergies Customer litigation costs decrease at Cnova Brazil Nova headquarters rationalization Customer litigation: Since day one Headquarters and overhead: Full implementation until end of 2016 Run-rate achieved in 2017 Integration committee already in place to monitor the implementation of synergies (1) Assumes transaction closes before end of (2) Corresponds to estimated pre-tax impact. 5

7 3 Pro forma impacts Limited balance sheet impact Limited cash out Limited cash out of BRL16m Only 1% of the consideration in cash Wellmanaged balance sheet impact Increase in consolidated net financial debt following integration of Cnova Brazil substantially compensated by immediate lower working capital requirements at closing: Working capital optimization thanks to the reduction of all overlapping inventories between Cnova Brazil and Via Varejo Pro forma debt position as of June 30, 2016 (BRLm) Net cash (debt) (1) / EBITDA (2) (1.51)x (0.63)x 1,227 Net cash Via Varejo (1,104) Net debt Cnova Brazil 123 Pro forma net cash (16) Cash out WC Synergies reduction post-tax 594 Pro forma net cash (1) Debt excludes CDCI. (2) Via Varejo 2016e EBITDA of BRL813m as per analysts consensus. Combined EBITDA of BRL940m including estimated synergies at run-rate. (3) Represents cash consideration for equity. (4) Assumes estimated after-tax (34%) synergies at run-rate, including financial synergies, for illustrative purposes. Synergies estimated by the management teams of Via Varejo and Cnova. (3) (4) (4) 6

8 4 Simplifying business management going forward Pre-transaction Reorganization Post-transaction Complexity in managing day-to-day commercial decisions Dedicated team to guarantee compliance with ( old ) Operational Agreement reduced decision making promptness and efficiency Simplified decision-making process enabling greater efficiency Commercial decisions made in light of an omnichannel, client-centric, strategic rationale Streamlining of the corporate structure and governance New simplified Operational Agreement between Via Varejo and GPA for the commercial and strategic alignment of their activities 7

9 5 Highest corporate governance standards, led by independent committees and final approval by minority shareholders Reorganization Agreement negotiation Via Varejo s Independent Committee (Renato Carvalho, Alberto Guth, Christophe Hidalgo) Operational Agreement negotiation Cnova s Independent Committee (Bernard Oppetit, Silvio Genesini, Emmanuel Grenier) Assisted by financial and legal external independent advisors in the analysis of the project GPA s Independent Committee (Maria H. Santana, Luiz A. C. do Lago, Eleazar de Carvalho) Assisted by financial and legal external independent advisors in the analysis of the project Assisted by financial and legal external independent advisors in the analysis of the project Transaction process conducted by Via Varejo, Cnova and GPA Deal governance aimed at ensuring independence of decision making by independent committees Focus on preservation of minority shareholders interests at entities involved in the process GPA will not exercise its right to vote and PN shares will have voting right on the resolution on the Reorganization at the Via Varejo EGM, to ensure the decision power to the minority shareholders Casino supports the transaction 8

10 5 Highest corporate governance standards, led by independent committees and final approval by minority shareholders (cont d) Step 1 Step 2 Step 3 Step 4 Step 5 Creation of committees Appointment of independent advisors Valuation analyses and negotiations Board approvals Minority shareholders approval Creation of independent committees following the announcement of a non-binding agreement on May 11, 2016 Via Varejo: Independent Committee Cnova N.V.: Transaction Committee GPA: Independent Committee Via Varejo: Santander (financial), Yazbek Advogados and Campos Mello (legal) Cnova: BNPP (financial), 8 Advisory (financial/expert), Freshfields (legal) GPA: Bradesco (financial), Chediak Advogados (legal) Santander prepared a valuation analysis BNPP and 8 Advisory updated their respective valuation analyses Via Varejo, Cnova and their respective advisors negotiated final transaction terms Bradesco and Chediak interacted with Via Varejo s and Cnova s advisors to prepare an opinion on the strategic merits from GPA s perspective Board approvals of transaction documents: Via Varejo: Reorganization Agreement and Operational Agreement (with GPA) Cnova: Reorganization Agreement GPA: Operational Agreement (with Via Varejo) and Engagement Letter (with Casino) CBD, the controlling shareholder of Via Varejo, voluntarily decided not to exercise its voting rights in the resolution on the Reorganization at the Via Varejo s EGM Minority shareholders (ON and PN holders) of Via Varejo will be the ultimate decision makers on the Reorganization 9

11 Key steps TODAY Q3 / Q Review and approval by the Board of Directors of Via Varejo based on the recommendation made by the Special Independent Committee Review and approval by the Board of Directors of Cnova N.V. Review and approval by the Board of Directors of GPA based on the recommendation made by the Special Independent Committee (Reorganization and Operational Agreement) Shareholders meeting of Via Varejo Shareholders meeting of Cnova N.V. Implementation of the Reorganization Synergies Committee in place will ensure the implementation of synergies expeditiously 10