Brazilian department store giant cancels acquisition citing financial crisis
29/10/2008 17:16
Brazil's second largest department store chain Lojas Renner S.A announced
yesterday it was canceling its acquisition of department store chain Leader
Participacoes S.A. due to the global financial crisis.
The acquisition was
first announced in March when the two companies signed preliminary agreements.
In early September, Renner disclosed the acquisition scale of 670 million reais
(US$313 million).
Renner was also to have inherited Leader's 74 million reais
of debt (US$34 million). 440 million reais (US$205 million) of the total amount
would have been paid in advance with the remaining 230 million reais (US$107
million) paid in five years.
The escalating global financial crisis has
finally halted the acquisition as both companies have suffered huge losses and
are incapable of paying the cost.
Many other companies in Brazil have also
suffered heavy losses from the financial meltdown and have had to reduce or
suspend investments and cancel acquisitions.
On Monday, financial consulting
firm Economatica announced that Brazilian companies in the Sao Paulo Stock
Exchange had lost nearly half their market value since the beginning of
2008.
Xinhua
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