Acquisition of Ponto Frio - Investor Presentation June 8, 2009
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Acquisition of Ponto Frio
Investor Presentation
June 8, 2009
1
Disclaimer
This presentation has been prepared in order to allow a better market understanding regarding the
details of the announced transaction.
In order to meet the abovementioned purpose, CBD’s management assumptions were considered, so
as the evidences that make these the most likely scenarios.
Future expectations related to this presentation shall consider the risks and uncertainties that involve
any activities and transactions, and that are beyond the control of the companies involved in this
transaction (including, but not limited to, political and economic changes, volatility in the exchange and
interest rates, technological changes, inflation, financial disintermediation, competitive pressure over
products and prices, changes in corporate and tax regulation, and also the approval of CBD’s Board of
Directors and general shareholders’ meeting, and the relevant authorities). Therefore, forward-looking
statements may result in material differences regarding future results.
This material is not intended to be the sole basis for assessing the performance of the Company
emerging from Ponto Frio acquisition, nor is it intended to contain all the information necessary for such
an assessment. It does, however, reinforce CBD’s strong commitment to transparency and the
cementing of close investor relations
This presentation does not substitute or alter any information available in the terms of the current
legislation and applicable corporate law.
2Agenda
1) Acquisition Strategy Abilio Diniz
2) Electronics and Household Appliance Market / Ponto Frio Enéas Pestana
3) Transaction Structure Pércio de Souza
4) Grupo Pão de Açúcar + Ponto Frio Claudio Galeazzi
3Tit: estrategia / abilio
Acquisition Strategy
Abilio Diniz
4Tit: mercado
estrategia/ /ponto
abiliofrio
Electronics and Household Aplliance Market / Ponto Frio
Enéas Pestana
5The Electronics / Household Appliance Market
in Brazil
Electronics / Household Appliance Growth Market Size and Potential (R$ billion)
in Brazil 2002a – 2007a 2008e – 2013e
CAGR 15.0% CAGR 14.6%
9 Real increase in individual earnings;
Household Appliances 15.9% Household Appliances 12.2%
9 Greater offer and access to credit; Electronics 14.3% Electronics 15.8%
9 Real Estate sector growth;
9 Electronic equipment has strong socio-behavioral appeal;
9 Frequent technological upgrades;
9 Low penetration of some categories at Brazilian homes;
9 Growing importance of Brazil as a highly-demanding market
for the industry (top 3 market for some major suppliers).
Importance of Sales Channels Market share ranking for specialized retailers
2% 4% e-commerce
10% 11% Hypermarkets 2008 Estimated
#
Ranking
1. Casas Bahia
2. Ponto Frio
88% 85% Specialized 3. Magazine Luiza
Retailers 4. Insinuante
5. Fast Shop
6. Ricardo Eletro
Household Aplliances Electronics
6Ponto Frio Highlights
Ponto Frio Sales Channels
9 Brazil’s second largest household appliance retailer; 2008 Stores
9 Main differentials: Total m2 = 318,136 Total m2 = 337,446
Internet Others m2 / store = 745 m2 / store = 737
Wholesale
Renowned brand; 5% 2%
9% 52
44
Well-located points of sale; 86
76
Attractive, well-kept stores; 6 6
Store
On-line sales channel (5% of total sales) with substantial
Chain
revenue growth: 33% CAGR between 2006 and 2008. 84% 301 314
2007 2008
Street Mega Shopping Digital
Store Location per State Rationale of the Acquisition
Nationwide Presence in 1Q09
Total 9 Increase share in the electronics / household appliance
455 Stores segment
10 DCs 9 Synergies with GPA (hypermarkets, extra.com, scale gains);
9 Market consolidation play and potential growth;
9 Increasing formality of the sector;
9 Ponto Frio
7 17 54 Immediate scale gain: Brazil’s 2nd ranked segment player;
15
Exposure to financial services (Investcred);
69 10 Presence in the “dot com” market;
117 Publicly-held company in the formal sector.
24 88
19 Distribution Centers
35
Source: Globex 1Q09 Stores
7Tit: mercado
a
estrategia
transacao
/ /ponto
abiliofrio
Transaction Structure
Pércio de Souza
8Main Terms of the Transaction
Transaction Acquisition of Globex’s controlling group shares
Value R$ 824.5 million (R$ 9.48 per Globex share)
Means of R$ 373.4 million cash down
Payment R$ 451.1 million as a term payment (4-year bullet restated by the CDI rate)
Tag Along 80% of the amount paid to the controlling shareholders under the same conditions
Private GPA Capital
Increase Up to R$ 664.4 million (R$ 40.00 per share) in a new class of shares (PNB)
Commitment of the
Globex’s controlling shareholders have undertaken to subscribe the capital increase with
Controlling
Shareholders the credits from the term payment
Alternative Tag Like the controlling group, the minority shareholders may subscribe GPA’s capital
Along Proposal increase with the credits from the term payment
9Transaction Structure
Stage 1. Acquisition of Globex’s Controlling Group Shares
Acquisition of the 87.0 million shares comprising
Globex’s Controlling Group by GPA (via a wholly-
owned subsidiary);
GPA
Acquisition price: R$ 824.5 million (R$ 9.48 / share):
Controlling Minority 9 Cash: R$ 373.4 million (45.3%);
Group Shareholders 9 Term payment: R$ 451.1 million (54.7%) as a bullet
70.2% ON 29.8% ON payment in the 4th year, restated by the CDI rate.
Globex Commitment of Globex’s controlling shareholder:
9 To subscribe GPA’s capital increase with the
credits from the term payment (see stage 3).
10Transaction Structure
Stage 2. Public (tag along) Tender Offer to Globex’s minority shareholders
GPA will hold a Public (tag along) Tender Offer, equivalent to 80% of the price paid for Globex’s Controlling
Block;
Tag-Along: R$ 7.59 / share, as follows:
9 45.3 % in cash (R$ 3.44 / share);
9 54.7 % as a term payment (R$ 4.15 / share), as a bullet payment in the 4th year, restated by the CDI rate.
Stage 3. GPA Capital Increase
Private capital increase by GPA in the amount of R$ 664.4 million, under the following conditions:
9 New class of shares (PNB);
9 Issue price: R$ 40.00 / share;
9 Fixed dividend of R$ 0.01 / share per year;
9 Shares convertible to PNA shares in the ratio of 1:1;
9 Possibility of subscribing with the credits from the term payment.
Conversion schedule (PNB PNA):
i. 32% on the 5th day following ratification of the capital increase;
ii. 28% in 6 months;
iii. 20% in 12 months;
iv. 20% in 18 months.
11Transaction Structure
Stage 4. Subscription of GPA’s shares
Globex Controlling Shareholders decided to subscribe the capital increase with credits from the term
payment;
For the purpose of the subscription, these credits will be valued at R$ 496.2 million (factor of 1.10x);
Adjustment mechanism:
9 For part (i) of the conversion, GPA will pay R$ 3.6894 / PNB share in cash on the 5th day following
confirmation of the capital increase (up to R$ 14.6 million);
9 For parts (ii), (iii) and (iv), on the date on which the conversion is settled, if there is any positive variation
between R$ 40.00 (restated by the CDI rate) and the weighted average of the price of the PNA share in
the last 15 trading sessions, GPA will pay said difference per PNB share converted.
Stage 5. Alternative Non-Tag Along Proposal
Alternatively to the Public Tender Offer, GPA will make a proposal to Globex’s minority shareholders
allowing them to take part in the capital increase (see stage 3), as follows:
9 Upon agreement to accept the alternative proposal, GPA will ensure that each Globex share receives:
A cash payment of R$ 3.44;
R$ 4.56 credit for subscription (R$ 4.15 X 1.10);
PNBs will respect the conversion schedule and will have the right to the same adjustment mechanism accorded to
Globex’s controlling shareholder.
12Transaction Structure
Current GPA Ownership Structure
GPA ON % ON PN % PN Total % Total
Wilkes Participações SA 65.4 65.6% 2.2 1.6% 67.6 28.5%
Diniz Family - directly 0.0 0.0% 32.7 23.7% 32.7 13.8%
Casino - directly 34.2 34.3% 2.4 1.8% 36.7 15.4%
Others 0.1 0.1% 100.5 72.9% 100.4 42.3%
TOTAL 99.7 100.0% 137.8 100.0% 237.5 100.0%
Ownership Structure¹ following Capital Increase
GPA ON % ON PN % PN Total % Total
Wilkes Participações SA 65.4 65.6% 2.2 1.4% 67.6 26.6%
Diniz Family - directly 0.0 0.0% 32.7 21.2% 32.7 12.9%
Casino - directly 34.2 34.3% 2.4 1.6% 36.7 14.4%
Others 0.1 0.1% 100.5 65.0% 100.6 39.5%
Globex Shareholders 0.0 0.0% 16.6 10.8% 16.6 6.5%
Total 99.7 100.0% 154,4 100.0% 254.1 100.0%
1) Assuming that: (i) every minority shareholder accepts the alternative proposal; (ii) no GPA shareholder exercises his preemptive right for
subscription; and, (iii) PNB shares are converted into PNAs.
13Tit: mercado
estrategia
a nova empresa
/ /ponto
abiliofrio
Grupo Pão de Açúcar + Ponto Frio
Claudio Galeazzi
14New Company (CBD + Ponto Frio) Highlights
CBD + Ponto Frio Sales by Category
CBD 2008 CBD + Ponto Frio 2008
9 Leadership in the Brazilian retail industry with Textiles
General General Textiles
approximately R$ 26 billion annual revenue; Merchandise 2.3% Merchandise 1.9%
12% 10%
9 Second largest company in the electronics /
household appliance segment; Electronics,
Electronics, Grocery
White Line
9 Over 1,200 stores (455 Ponto Frio stores); 10% Grocery White Line, 39%
47% Furniture
9 28 Distribution Centers (18 GPA + 10 Ponto Frio);
Perishables 26%
9 Around 80,000 employees. 29% Perishables
23%
1600 bps increase
Gross Sales in Electronics / Household Appliances 2nd Biggest Player in the Segment
Extra Hiper
Extra Eletro
Extra.com
R$ 2.2 Bn GPA
Eletro
R$ 7.0 Bn
Ponto
Frio
R$ 4.8 Bn
15New Store Location Map
Goiás Ceará
Piauí
3 + 15 = 18 4 22
Federal District Rio Gde do Norte
2
16 + 17 = 33
Paraíba
Minas Gerais 3
5 + 69 = 74 Pernambuco
10
Mato Grosso Alagoas
2
7 Sergipe
Mato Grosso do Sul 1
Bahia
1 3 + 54 = 57
São Paulo Espírito Santo
421 + 117 = 538 10
Rio de Janeiro
Paraná
101 + 88 = 189
6 + 24 = 30 Rio Grande do Sul 1055 Stores
Santa Catarina
145 Drugstores
35 19 75 Gas Stations
Entering new states
Apr Novos Estados Gas Stations Drugstores
2009
144 106* 165 73 47 37 28 455 75 145
16Synergies
Estimated Synergies
9 Partnerships with suppliers;
9 Gains in scale;
9 Increased operational, commercial and
administrative efficiency;
R$ 500 million
9 Strenghtening of financial products and services;
9 Integrated e-commerce, IT and logistic operations;
9 Marketing.
Present Value of Tax Benefit Goodwill
9 Estimated at R$ 100 million
17Transaction Advisors
Financial Advisor
Legal Advisor
18Forward-looking Statements
The forward-looking statements contained herein are based on our management’s current assumptions
and estimates, which may result in material differences regarding future results, performance and
events. Actual results, performance and events may differ substantially from those expressed or implied
in these forward-looking statements due to a variety of factors, such as general economic conditions in
Brazil and other countries, interest and exchange rate levels, legal and regulatory changes and general
competitive factors (whether global, regional, or national).
Grupo Pão de Açúcar (GPA)
Investor Relations Team
Phone: +55 (11) 3886 0421
Fax: +55 (11) 3884 2677
gpa.ri@grupopaodeacucar.com.br
www.gpari.com.br/eng
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