B2W Cia. Digital, Brazil’s biggest online retailer, jumped the most on record after saying the company is boosting capital by 2.38 billion reais ($992 million) and selling new shares to its controlling shareholder and a U.S. firm to pay debt and make investments.
The shares soared 42 percent to 21.95 reais at the close of trading in Sao Paulo, the biggest one-day advance on record. Trading volume was seven times the three-month daily average.
Lojas Americanas SA, the Rio de Janeiro-based retailer that owns 62 percent of B2W, will buy at least 1.02 billion reais of shares at 25 reais each, according to a Jan. 24 regulatory filing. Tiger Global Management LLC, a New York-based investment firm with stakes in Yahoo! Inc. and Amazon.com Inc., will invest 459.2 million to 1.2 billion reais. That would give it a stake of as much as 19 percent, according to Bloomberg calculations.
“A capital increase, especially with an injection from an international player and of this size, could help handle some short-term debt-related demands,” Joao Pedro Brugger, who helps oversee 400 million reais at Leme Investimentos Ltda., said in a phone interview from Florianopolis, Brazil. “It was a very significant premium. The trend is for the stock to converge to a level close to 25 reais.”
B2W more than doubled from June 30 through Jan. 24, making it the best performer among the Sao Paulo Stock Exchange’s 100 most-traded companies. The online retailer, which has reported losses for the past 12 quarters, has been building distribution centers and expanding its logistics business after delivery delays triggered customer complaints during the 2010 and 2011 holiday seasons.
“The capital increase will allow the company to keep investing in the pillars of its business, speeding its growth and consolidating market leadership,” B2W said in the filing. “Resources obtained will be destined to pay part of the company’s debt.”
Shares of controlling holder Lojas Americanas gained 1.1 percent to 14.90 reais in Sao Paulo.
The transaction, which will entail the issuance of a combined 95.2 million of additional voting shares, requires shareholder approval, according to the filing.
“B2W needed a capital injection to complete all the investments they’re doing to improve the company’s logistics and financial structure,” Maria Paula Cantusio, an analyst at Banco do Brasil SA, said by phone from Sao Paulo. “This will boost results, and definitely have a positive impact on the share price.”
Press officials from Tiger Global, B2W and Lojas Americanas declined to comment further on the transaction.
B2W operated with seven distribution centers at the end of the third quarter, director of investor relations Fabio Da Silva Abrate said on a Nov. 14 conference call. The company planned to open at least seven new distribution centers through the end of 2015, he said.