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Lowe’s Said to Hire Goldman to Find Brazil Acquisitions

Aug. 15 (Bloomberg) -- Lowe’s Cos. is seeking acquisitions in Brazil, two people with knowledge of the matter said, in a move that would help it penetrate a fragmented industry to take advantage of a growing pool of home owners.

Lowe’s is working with Goldman Sachs Group Inc. as it searches for targets, said the people, who asked not to be identified discussing private information.

Options for the Mooresville, North Carolina-based company include buying part of BR Home Centers, the home-improvement holding company valued at about 500 million reais ($220.1 million) that is working with Rothschild to study strategic options, one of the people said. Also exploring a sale is Curitiba-based Balaroti Materiais de Construcao SA, which is working with Morgan Stanley, according to the person.

While Lowe’s and rival Home Depot Inc. have built a presence in Mexico, the U.S. construction-materials super stores have yet to expand into most of Latin America. An acquisition in Brazil would have Lowe’s entering a market where the formal home-improvement industry still competes with corner hardware stores, even as rising incomes present compelling prospects for sales.

Although economic growth is slowing this year, retailers still see a market in which tens of millions of Brazilians entered the middle class in the past decade. The government has also encouraged home ownership with its low-income housing initiative dubbed Minha Casa, Minha Vida -- or My Home, My Life -- which has delivered more than a million homes, with more on the way.

Construdecor Stake

Last year, Santiago, Chile-based SACI Falabella bought a majority stake in Brazilian home-improvement chain Construdecor SA, which runs stores under the Dicico brand, for 388 million reais ($171 million).

Lowe’s, Balaroti, Goldman Sachs and BR Home Centers declined to comment. Morgan Stanley and Rothschild didn’t respond to requests for comment.

Lowe’s is the second-largest home-repair retailer in the U.S., with $53.4 billion in revenue last year, behind Home Depot’s $78.8 billion.

Both companies missed estimates for same-store sales in the first quarter as a harsh, prolonged winter forced people to put off renovations.

To contact the reporters on this story: Jonathan Levin in Sao Paulo at jlevin20@bloomberg.net; Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editors responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net Kevin Orland

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