Shares of Brazilian malls operator Aliansce Shopping Centers SA were up 7% in Sao Paulo stock exchange, at 23 reais, after the announcement of a merger with smaller rival Sonae Sierra Brasil.
As part of a share-swap deal, Aliansce shareholders will hold a 68% stake of the combined group, which will be renamed Aliansce Sonae Shopping Centers, according to a securities filing.
Sonae shareholders will hold the remaining 32.1% stake. The transaction is still subject to approval by shareholders assemblies and regulatory authorities in Brazil.
Aliansce shareholders that prefer to sell their shares rather than approve the merger will receive 12.60 reais per share, according to the filing.
If the transaction is completed, the combined company will own 40 malls and become Brazil’s second-largest mall group in terms of gross leasable area, with a total of 7,000 stores.
Together, Aliansce and Sonae reported total sales volume of approximately 14.8 billion reais (approximately $3.83 billion) in 12 months, with a combined net revenue of 876 million reais.
Cost savings stemming from the combination may reach up to 70 million reais, the companies said.
Earlier this year, Sonae Sierra acquired 50% of three companies from the Luís Malheiro (LM) Group, thereby broadening its business scope to offer a wider range of services to its customers in the areas of engineering project management and building maintenance and management, to carry out all types of projects, both in Portugal and abroad.
The companies are LMSA, specialising in projects of technical engineering facilities; LMGE, specialising in maintenance management, building maintenance and operations, technical audits and energy efficiency; and LMIT, which develops software for energy and water consumption optimisation.
As a result of this partnership, Sonae Sierra now has a team of specialised professionals, allowing it to offer its customers a more comprehensive service range in all engineering and architectural areas, with enhanced know-how and integrated solutions for a wide variety of challenges of any real estate project.
RPA Perspective According to Fernando Guedes de Oliveira, Sonae Sierra's CEO: “Sonae Sierra delivered another solid operational performance in the first quarter of 2019, as it continued to focus on the execution of its long-term strategy of growing its services and development businesses and of capital recycling.”
Sonae Sierra’s EBIT increased by 9%, reflecting the improved performance of its portfolio in Europe and Brazil, as well as improvements in its Services business. This is particularly noteworthy as the increase in EBIT was affected by Brazilian Real exchange rate fluctuations, and portfolio disposals.
In the first three months of the year, Sonae Sierra saw its Direct Result rise to €19.6 million, an increase of around 16% compared to the same period in 2018, driven by an improved performance of its asset portfolio, both in terms of rents and tenant sales, and a significant growth in its Services EBIT.
Sonae Sierra continued to implement its capital recycling strategy in the first quarter of 2019.
In January, Sonae Sierra announced the new Joint Venture Sierra Balmain, through the acquisition of a 50% stake in Balmain, a Polish services company with a portfolio of 15 shopping centres under management. This transaction allows Sonae Sierra to enter the Polish market and to consider expanding to other CEE markets.
Disposals included the 9% stake in Loop5 (Germany) in January 2019, while the full disposal of LeiriaShopping (Portugal) was completed in April.
The Ores Socimi, a fund managed by Sierra’s Investment Management Services business, acquired a high-street asset in Spain (Burgos) occupied by fashion tenant Stradivarius.
The execution of Sonae Sierra’s development pipeline also continued in the first three months of 2019. Sonae Sierra’s first shopping centre in Colombia, Jardín Plaza Cúcuta, opened its doors on February 27th 2019. This successful Joint Venture with Central Control, a local shopping centre specialist, represented an investment of €52 million and a gross leasable area (GLA) of 40,000 m2 for 180 shops, making it the largest shopping centre in the city.
Construction works also continue apace at McArthurGlen Designer Outlet Malaga (Spain). This 50/50 joint venture between McArthurGlen and the Sierra Fund represents a €140 million investment to create 30,000 sq m of new retail space.
