Hypermarcas SA jumped the most on record after it agreed to sell its personal-care and beauty division to Coty Inc. for 3.8 billion reais ($991 million).
Shares gained 21 percent to 21.20 reais Tuesday in Sao Paulo, while the company’s $323 million of bonds due 2021 rose 0.93 cent to 101.27 cents on the dollar.
Hypermarcas will seek to prepay as many bonds as possible and pay off the remainder when they come due, Chief Executive Officer Claudio Bergamo said in a telephone interview Monday. “First thing the company might do is exercising call on its 2021 bonds in the second quarter next year.”
The deal prompted analysts at Itau BBA and Santander to raise their recommendation on the shares to buy from hold. Fitch Ratings said the deal could result in a credit profile more consistent with an investment grade rating, placing the company on watch positive. Fitch rates Hypermarcas BB+, one level below investment grade.
The sale can be seen as “very positive” for Hypermarcas, said Banco Bradesco BBI SA analysts Ricardo Boiati, Luiz Felipe Guanais and Raquel Erzinian. “Net debt should be zeroed, boosting earnings per share between 20 percent and 30 percent in 2016,” they wrote in a report Tuesday.