Business

B2W will raise BRL 2.5 billion in capital to fight Magazine Luiza and MercadoLibre

The money will be raised in a new share offering, mostly subscribed by Lojas Americanas

Brazilian retailer results on the last quarter
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  • B2W, an enterprise under the brands Lojas Americanas.com, Submarino, and Shoptime, will raise BRL 2.5 billion in a share offering;
  • Analysts from XP and BTG Pactual see this move as positive, considering the investment in new technologies and stronger ecosystems that the company’s competitors such as Magazine Luiza and MercadoLibre have made. 

The Brazilian e-commerce company B2W, an enterprise under the brands Lojas Americanas.com, Submarino, and Shoptime, will raise BRL 2.5 billion ($ 618 million)–13% of its market cap (at BRL39/share, 8% discount to yesterday’s closing price)–in a share offering. The company shared the information to its shareholders on Monday.

In the statement, B2W said it will issue 64.1 million new shares at BRL 39 per share. B2W’s controlling shareholder Lojas Americanas is committed to exercising its right to subscribe the shares proportionally to its stake in the company (61.5%) and to subscribe any unsubscribed shares.

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Analysts from XP and BTG Pactual see this move as positive, considering the investment in new technologies and stronger ecosystems that the company’s competitors such as Magazine Luiza and MercadoLibre have made. 

According to BTG Pactual analysis, the capital increase aims to improve B2W’s capital structure, enabling the company to continue investing in the digital platform and accelerating its growth, whilst building an ecosystem that involves e-commerce and payments. Both BTG and XP expect a negative reaction from investors concerning Lojas Americanas’s operation expenses in the short term. 

“Although another capital increase may sound negative at first sight, we flag that it really increases B2W’s capacity to keep investing in the business, under a healthier and more profitable business model, after its strategy of faster migration to a more marketplace-centered model since the beginning of 2017,” said BTG analysts.

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B2W posted net losses of BRL 127.6 million in the last quarter, which represents a 15.1% drop in its results, compared to the same period last year. In disclosing these figures, the company also said that it is betting on new projects, such as the B2W carrier, whose results are not included in the balance, and the digital wallet project Ame.