Cnova NV, the online retailer, rose the most in three months after providing details on plans announced in May to exit the Brazilian market and be taken private by its parent company.
Cnova jumped 6.6 percent to 4.66 euros at the close in Paris, the biggest gain since May 12, when the reorganization was announced. It advanced 9 percent to $5.19 at 1:19 p.m. in New York. Cnova went public in the U.S. in November 2014, offering 29.2 million shares at $7 each.
The retailer’s parent, French grocer Casino Guichard-Perrachon SA, is reorganizing its Brazilian operations. Casino’s interests include Cia Brasileira de Distribuicao, Brazil’s biggest retailer, known as GPA, which operates Cnova Brasil and Via Varejo, an appliance merchant.
Under the accord, Cnova will transfer its Brazilian subsidiary to Via Varejo in exchange for 97 million Cnova shares that Via Varejo holds and 15.7 million reais ($5 million), according to a statement Tuesday. Cnova also will receive the repayment of a $157 million loan. Once the restructuring is complete, Casino will begin offers to buy all outstanding shares of Cnova traded in the U.S. and Paris for $5.50 a share.
Via Varejo, which will keep Cnova Brasil’s operations, dropped 3.1 percent to 6.60 reais in Sao Paulo. GPA will remain a minority investor in Cnova NV.
Casino has been selling assets in Asia and Latin America to cut borrowings amid an attack from shortseller Carson Block. Among Block’s criticisms is that the retailer has a “dangerously” high debt burden, an assertion the company denies. Standard & Poor’s cut Casino’s credit rating to junk in March.
In July, Casino reported its fastest sales growth in two years, fueled by growth at its Assai cash and carry stores in Brazil.
GPA posted a larger-than-expected loss in the second quarter, pressured by costs from an internal probe of Cnova, along with store closings and firings amid Brazil’s worst recession in at least a century. The exchange terms already take into consideration the results of the probe, according to a filing sent to Brazil’s market regulators.
GPA said it has identified potential cost cuts of 245 million reais and a one-time gain of about 325 million reais from the merger of Via Varejo and Cnova Brasil, according to a filing.