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Hypermarcas Jumps on Mabesa do Brasil Acquisition

Hypermarcas SA, the Brazilian maker of consumer products, rose the most in almost a month after announcing the acquisition of Mabesa do Brasil Ltda. to become the largest children’s diaper producer in the country.

The shares jumped 2.9 percent to 22.90 reais at 4:07 p.m. New York time in São Paulo trading, the most since July 13. Hypermarcas is up 15 percent this year, compared with a 1.1 percent drop in Brazil’s benchmark Bovespa index.

With the 350 million reais ($199.7 million) acquisition of Mabesa, Hypermarcas will hold 26 percent of the children’s diaper market in Brazil, according to the statement e-mailed by the company yesterday. Mabesa produces children and adult diapers and feminine pads for brands that include Cremer-Disney and Plim Plim.

“Hypermarcas continues to deliver on its M&A plan,” UBS Investment Research analysts including Marimar Torreblanca said in a research note today.

The company’s cash position, with 1.6 billion reais of cash, following a secondary share offering in April and debenture issuance in July, provides Hypermarcas with the liquidity to make further acquisitions and increase growth, BTG Pactual said in a report today.

“We expect this solid financial position to lead to another season of acquisitions, which should translate into additional upside to our growth estimate,” BTG Pactual said. The firm rates the stock “buy.”

Hypermarcas reported yesterday second-quarter net income fell 60 percent to 53.3 million reais. The results missed the 81.5 million reais mean estimate of four analysts in a Bloomberg survey.

Profit was pressured by “higher marketing and financing expenses,” Torreblanca of UBS wrote.

The Mabesa acquisition will save about 30 million reais as Hypermarcas consolidates its disposable hygiene products operations in the company’s Mogi das Cruzes plant, Chief Financial Officer Martim Prado Mattos said on a conference call today. The integration will bring an additional 10 million reais of synergies per year, he said.

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