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Merger of Casas Bahia and Ponto Frio appliance chains is authorized by Cade

Merger

The result of the operation is the creation of the largest retail company in Brazil
published: Apr 18, 2013 10:00 AM last modified: Apr 14, 2016 11:45 AM

On April 17th, the Administrative Council for Economic Defense - Cade approved, with restrictions, the merger between Ponto Frio and Casas Bahia appliance chains. The result of the operation is the creation of the largest retail company in Brazil, called Via Varejo, an association between Grupo Pão de Açúcar and Casas Bahia.

The transaction approval was conditioned to the signing of a Performance Agreement (TCD, for its acronym in Portuguese) through which the Via Varejo agrees to sell 74 commercial spots in 54 municipalities: 25 located in the State of São Paulo, 15 in Rio de Janeiro, 6 in Minas Gerais, 5 in the Distrito Federal, 1 in Goiás, 1 in Espírito Santo, and 1 in Mato Grosso.

According to the reporting commissioner, Marcos Paulo Verissimo, the downsizing by Via Varejo is needed because, together with Casas Bahia and Ponto Frio, it holds a 60% market share in those municipalities for the retail of durable goods.

"There is a high probability that those firms will exercise their market power in those municipalities that demands the imposition of structural measures to ensure competition" he said. For him, the fact that the intervention was consensual demonstrates that the companies recognize the important role of Cade.

The merger occurs due to two transactions informed to Cade in 2009: the first was approved without restrictions (merger file no. 08012.004857/2009-18) and it addresses the acquisition by Grupo Pão de Açúcar of 70.24% of Ponto Frio, followed by a mandatory tender offer for the acquisition of shares held by minority shareholders; the second is (merger file no. 08012.010473/2009-34) the association of Grupo Pão de Açúcar and Casas Bahia for the combination of their businesses for the retail of durable goods.

After both operations were completed, Grupo Pão de Açúcar created a holding called Via Varejo to manage Ponto Frio and Casas Bahia appliance chains and an e-commerce company responsible for sales of all three brands on the internet.