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Spinoff Of GPA's Wholesale Unit Boosts Combined Company's Market Cap By 10%

Published on Mar 2 2021 9:59 AM in Retail tagged: Brazil / wholesale / GPA / Assaí / Spinoff

Spinoff Of GPA's Wholesale Unit Boosts Combined Company's Market Cap By 10%

Brazilian food retailer GPA SA's spinoff and listing of its Assaí wholesale unit has boosted the combined company's market capitalisation by 10%, highlighting the importance of the format to the company's overall growth.

Assai debuted on Brazil's stock exchange at R$73 per share, and with a market capitalisation of R$19.6 billion ($3.51 billion). The unit was spun off on Friday (26 February) and was listed separately on Brazil's B3 exchange on Monday (1 March).

As the first quote for reference in the listing was the unit's book value, Assaí stock opened up almost 400%.

Former parent GPA's shares were down 72% at R$18.75, and the company's market value dropped from R$22.3 billion on Friday to R$5 billion, as investors attributed most of the value to the wholesale unit.

Wholesale Stores

Brazilian shoppers have embraced wholesale format stores in general given the relative value and range of products they offer, a trend that has also benefited rival Carrefour Brasil's Atacadao brand.

The combined value of Assai and GPA, controlled by France's Casino Guichard Perrachon, rose 10% to R$24.6 billion on Monday (1 March)from R$22.3 billion on Friday (26 February).

According to traders, the wild swings in share prices in the first trading day happened because the reference used for Assaí was book value. There was no bookbuilding for the listing of the unit.

Last week, GPA obtained authorisation to list the shares issued by Sendas Distribuidora S.A. (Assaí) on the Novo Mercado segment of the B3 SA - Brasil, Bolsa, Balcão.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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