By Brazil Stock Guide – CVC Brasil Operadora e Agência de Viagens (CVCB3) said it has not received any communication or proposal for a public tender offer for its shares, after Brazilian newspaper O Globo reported that Despegar.com, the owner of Decolar and controlled by Prosus, is preparing a bid for the company.
According to the report, a potential offer would be above R$3.30 per share. CVC shares closed Friday at R$1.93. At that level, a bid above R$3.30 would represent a premium of about 71% over the market price.
In a market notice released Sunday, CVC said it constantly reviews opportunities that may benefit the company and its shareholders, but added that, as of the date of the notice, it had not received any communication or proposal regarding a potential tender offer.
No formal offer
CVC’s response did not address the strategic merits of a combination with Decolar or whether third parties may be studying a transaction. The company limited its statement to saying that no formal proposal had been submitted.
O Globo reported that a deal would seek to combine Decolar’s technology infrastructure with CVC’s physical network, which includes more than 1,600 agencies. The newspaper also said a transaction would require regulatory approval because it would involve two of the region’s largest travel groups.
Debt trigger
The report comes at a sensitive moment for CVC. The company has called a debenture holders’ meeting for May 5 to vote on whether not to declare the early maturity of its fourth debenture issuance.
The trigger was activated by a shareholders’ agreement signed on April 2. According to CVC’s official documentation, the agreement brings together investors holding about 35.52% of the company’s share capital.
Under the debenture deed cited by CVC, an early-maturity event subject to a debenture holders’ meeting occurs when an investor or group of investors, through a shareholders’ agreement, holds 30% or more of the company’s capital.
CVC’s management recommends that debenture holders approve the non-declaration of early maturity. The company argues that the shareholders’ agreement does not affect its payment capacity and does not change the financial terms of the debentures.
Control question
The shareholders’ agreement also depends on approval at a CVC extraordinary shareholders’ meeting of a waiver of the obligation to launch a tender offer triggered by a relevant ownership threshold, under the company’s bylaws.
That leaves CVC dealing with two separate fronts. One is external and still not formalized, according to the company: the possible Decolar offer reported by O Globo. The other is internal and already documented: a shareholders’ agreement that triggered debt provisions and still needs shareholder approval.
The shareholders’ agreement includes a two-year lock-up, but allows linked shareholders to tender their shares into a public offer launched by a third party not related to the agreement’s parties or their affiliates. That clause could become relevant if Decolar or Prosus eventually submits a formal proposal.
For now, the official fact is that CVC denies having received an offer. The documented corporate fact is that the company must persuade debenture holders not to accelerate its debt while shareholders debate a new power structure inside the company.
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