Companies battle to acquire Brazil’s Netshoes

There’s something about Netshoes, the Brazilian sportswear e-tailer. Two companies are battling to acquire the ailing nineteen-year-old business, which used to be Latin America’s largest in its segment but failed to turn a profit and has seen its shares drop by 85 percent since its IPO at the New York Stock Exchange in 2017. The first contender is Magazine Luiza, an electronics and home appliances retailer looking to expand and compete with Amazon as the American giant spreads its tentacles in Brazil. The other one is Grupo SBF, owner of Centauro, Netshoes’ main competitor in sportswear e-commerce in the South American country.

Magazine Luiza announced in April that it had reached an agreement to acquire Netshoes for 62 million US dollars (2 US dollars a share), 1 million dollars more than the company’s accumulated net loss in Q3 2018. The transaction has been approved by Brazil’s competitive regulator, CADE, but is still pending approval by Netshoes’ stakeholders, who are supposed to meet to discuss the matter on Thursday, May 30. Grupo SBF took the opportunity to make a higher bid, offering 40 percent more (87 million dollars or 2.80 dollars per share) for the company last week.

But Magazine Luiza will not give up the fight. The retailer announced yesterday that it has raised its initial offer by 50 percent to 93.18 million US dollars or 3 dollars per share. Netshoes’ board of directors then published a statement recommending stakeholders to accept Magazine Luiza’s new offer. If they do, the transaction may be concluded before June 12.

Founded in 2000 in Brazil and soon expanded to Argentina and Mexico, Netshoes has over 30 million unique visitors monthly. The company also operates two other online stores in Brazil, Zattini and Shoestock, and provides e-commerce solutions for dozens of brands, including Puma, NBA, UFC and NFL. The company has recently sold its Argentinian and Mexican operations.

Picture: Netshoes Facebook