merger of and november 24, 2006. disclaimer statements related to the prospects of the business,...
TRANSCRIPT
Merger of and
November 24, 2006
Disclaimer
Statements related to the prospects of the business, estimates for operating and financial
results, and those related to growth prospects of the companies eventually expressed in this
release, are merely projections and, as such, are based exclusively on the expectations of the
companies’ management concerning the future of the business and its continued access to
capital to fund the companies’ business plans. Such statements rely, substantially, on
changes in market conditions, government regulations, competitive pressures, the
performance of the Brazilian economy and the industry, among other factors and are,
therefore, subject to change without prior notice.
1
Agenda
Highlights of Lojas Americanas and Americanas.com
B2W: Combination of two successful companies
Strategic rationale for the merger
Key terms of the transaction
Implications to shareholders of Lojas Americanas
2
Lojas Americanas – Key Operating and Financial Highlights
Selling Area and Number of Stores Gross Sales(R$ in million)
3,640
2,949
1,9182,325
1,765
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2001 2002 2003 2004 2005
98121105
156193
236 243259
294330
0
50
100
150
200
250
2001 2002 2003 2004 2005
0
50
100
150
200
250
300
350# of Stores
Selling Area ('000 m2)
344309
266
170
229
0
50
100
150
200
250
300
350
400
2001 2002 2003 2004 2005
EBITDA and EBITDA Margin(R$ in million)
Revenue per Employee(R$ in ‘000)
90
218
143
275331
6.2%
9.1%
11.2%12.1% 12.0%
0
50
100
150
200
250
300
350
400
450
2001 2002 2003 2004 2005
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16EBITDA
EBITDA Margin CAGR: 19%
CAGR: 20%
CAGR: 38%
(1) LTM information as of September 30, 2006.
3
252 302566
942
1,758
2,850
3,776
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2000 2001 2002 2003 2004 2005 LTM
444
268
81166
25
865
1,358
0
200
400
600
800
1,000
1,200
1,400
1,600
2000 2001 2002 2003 2004 2005 LTM
3,396
2,248
209159345
823
0250500750
1,0001,2501,5001,7502,0002,2502,5002,7503,0003,2503,5003,750
2000 2001 2002 2003 2004 2005 LTM
124
77
3517
9
(44)
(13)
7.0%8.3%
11.2%
13.0%12.8%
(70)
(20)
30
80
130
180
2000 2001 2002 2003 2004 2005 LTM
0
0
0
0
0
0
0
0
Americanas.com – Key Operating and Financial Highlights1
Number of Clients(‘000)
Gross Sales(R$ in million)
Note: LTM information as of September 30, 2006.(1) Consolidated information (Americanas.com plus Shoptime). Shoptime was acquired in August 2005 and financial information has been consolidated since September 2005.
+130 bp
+290 bp
+160 bp
Number of Orders(‘000)
EBITDA(R$ in million)
CAGR: 100%
CAGR: 60%
4
206
602
311
950
12.8% 13.0%8.3%
11.2%
0
100
200
300
400
500
600
700
800
900
1,000
2003 2004 2005 LTM(1)
Net Revenues
EBITDA Margin
B2W: Combination of Two Successful CompaniesB2W emerges with a solid economic and operational platform built by Americanas.com and Submarino within the past years
Net Revenues and EBITDA Margin (R$ in million)
Net Revenues and EBITDA Margin (R$ in million)
1999: Foundation
2000: Capital injection from financial sponsors
2005: Acquisition of Shoptime– Successful integration and significant
operational synergies achieved
2006: Fully owned subsidiary of Lojas Americanas
1999: Foundation
2005: IPO
2006: Follow-on
2006: Acquisition of Ingresso.com and Travelweb
167
419
276
552
10.6% 10.2%
8.0%9.6%
0
100
200
300
400
500
600
700
800
900
1,000
2003 2004 2005 LTM(1)
Net Revenues
EBITDA Margin
(1) LTM information as of September 30, 2006.
5
Key Highlights of the New Company
• Gross Revenues LTM 3Q2006: R$2.1 billion
• EBITDA Margin LTM 3Q2006: 12.0%
• Unique platform with successful brands and significant growth potential
• EBITDA LTM 3Q2006: R$180 million
KiosksAmericanas.com
TV
6
Strategic Rationale
Enhanced growth potential by expanding sales channels and offering new products and services
Maintenance of absolute history of success and client relationship of both companies: tradition of the Americanas brand and Submarino’s pioneering
Experienced management teams with proven execution capabilities
Platform for immediate international expansion: scale and capacity to explore globalization opportunities in the retail market
Creation of the largest retail company listed under the “Novo Mercado”
Best practices of Corporate Governance
Combination of successful operating practices and platforms, generating immediate benefits to clients, shareholders and employees
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Strategic Rationale (Cont’d)
Focus on the development of its employees, alignment of interests among all stakeholders and consequently value creation to shareholders
Solid positioning to capture benefits from the domestic and international retail market expansion
Significant economies from efficiency gains and operating synergies
– Immediate implementation of best practices from each company
i.e. logistics, fulfillment, marketing, fraud management, telemarketing, hosting/links, etc
– Natural benefits derived from economies of scale
i.e. maximization of product mix, elimination of operating redundancies, etc.
– Optimization of working capital
– Present value of synergies derived from the transaction estimated in approximately R$800 million
B2W emerges with the commitment and strong potential for improved value creation to its shareholders
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Key Terms of the Transaction
B2W: result of total merger of Americanas.com and Submarino
Structure • Full merger of Americanas.com and Submarino, creating B2W
Ownership • 53.25% Lojas Americanas and 46.75% Submarino shareholders (fully diluted)
Listing • Novo Mercado, Bovespa
SeniorManagement
• Co-CEOs (minimum period of 1 year)
Corporate Governance
• By-laws of B2W based on Submarino’s by-laws• Board of Directors formed by 5 members indicated by Lojas Americanas and 4 independent• Audit committee formed exclusively by independent directors• Vote of a majority of independent directors required for certain actions• 2 year lock-up period• 4 year standstill period
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Illustrative Transaction Structure
Pre-merger Structure – Submarino
Pre-merger Structure – Americanas.com Ownership Structure After the Merger
ControllingShareholders
Float
Lojas Americanas
Americanas.com
100%
Float
Submarino
100%
SubmarinoShareholders
Submarino
Lojas Americanas
Americanas.com
B2W
43.75% of B2W shares
53.25% of B2W shares
100% of Submarino
shares
100% of Americanas.com
shares
R$500 million capital
reduction / distribution
R$175 million capital increase
10
Recent Financial Performance
R$ million 2005 LTM (1) 2005 LTM (1) 2005 LTM (1)
Net Revenues R$603 R$950 R$420 R$552R$1.023 R$1.501
Revenue Growth 94% 96% 52% 48% 74% 75%
Gross Margin 29% 32% 28% 28% 28% 31%
EBITDA Margin 13% 13% 11% 10% 12% 12%
Operating Margin 12% 11% 9% 9% 11% 10%
B2W
(1) LTM information as of September 30, 2006.
11
Pro Forma Capitalization
September 30, 2006
R$ million
Cash R$53 R$372 (R$325)¹ R$100
Working Capital R$126 R$184 R$310
Debt R$332 R$2 R$335
Net Debt R$279 (R$370) R$325¹ R$234
Adjustments B2W
(1) Includes capital de reduction of R$500 million at Submarino and cash injection of R$175 million in Americanas.com
Note: For the full terms of the capitalization of B2W and the respective contribution of both Submarino and Americanas please refer to the Merger Agreement and other relevant transaction documents
12
Key Implications for Lojas Americanas
Immediate value reference for online retail operations
– Availability of information
– Clear value reference based on B2W market capitalization
Value creation after merger
– Better growth perspectives / operating platform
– Potential synergies
Transaction allows a better valuation of Lojas Americanas
Opportunity to capture and better evaluate off-line retail operations
13
Sequence of Events
Transaction already approved and recommended by the Board of Directors of Lojas Americanas and Submarino
Closing conditions
– Submarino shareholders’ approval
– Anti-trust / regulatory approval
Expected closing by December 2006
14