Scandal-Plagued Brazil Family Gets $1.1 Billion for Flip-Flops

Havaianas flip-flops.

Photographer: Miguel Schincariol/AFP via Getty Images

The family at the center of Brazil’s political crisis agreed to sell its stake in the Havaianas flip-flop business for 3.5 billion reais ($1.1 billion), part of an asset selloff to pay down legal settlements.

The deal hands control of one of the nation’s most iconic consumer brands to Cambuhy Investimentos Ltda. and Brasil Warrant, both run by the Moreira Salles family, and Itausa - Investimentos Itau SA, backed by the Setubal family. The investors will pay 14.25 reais per common share and 11.40 reais per preferred share to acquire 54 percent of Havaianas parent company Alpargatas SA, according to a statement Wednesday.

The transaction marks the end of an almost two-year period where Havaianas was under the control of J&F Investimentos, the holding company of brothers Wesley and Joesley Batista. The firm agreed last month to pay 10.3 billion reais as part of a leniency agreement with Brazilian authorities after the brothers, who run meat producer JBS SA, confessed to graft and other crimes. The admissions have led to a spiraling scandal that put President Michel Temer’s mandate in jeopardy.

The move comes less than a month after J&F said it was in talks to sell pulpmaker Eldorado Brasil Celulose SA to Chile’s Celulosa Arauco y Constitucion SA, which made an offer of about 14 billion reais ($4 billion) including debt, according to a person with direct knowledge of the matter. J&F plans to raise at least 8 billion reais through divestments that also include dairy company Vigor Alimentos SA, S&P Global Ratings said in a report last month.

Alpargatas rose 1.4 percent to 14.20 reais at the close Wednesday, the highest since November 2013.

The Batista brothers agreed to buy control of Alpargatas in late 2015 using a 2.67 billion-real loan from government-owned Caixa Economica Federal in a deal that’s being investigated by the country’s audit court.

Cambuhy was established in 2011 by the billionaire co-chairman of Itau Unibanco Holding SA, Pedro Moreira Salles, who has a 31 percent stake in the private equity firm. The Moreira Salles clan, with a combined fortune of about $20.8 billion, and the Setubals are the families who jointly control Itau, Latin America’s largest bank by market value.

Buying Havaianas gives new owners a brand worn by the likes of Kim Kardashian and Gwyneth Paltrow. The footwear sits atop the global flip-flop hierarchy, with a Swarovski-encrusted pair retailing for $70 at Saks Fifth Avenue.

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