By Brazil Stock Guide – Guararapes Confecções S.A. (GUAR3) finalized the sale of Midway Mall in a R$1.61 billion transaction with a group of investors led by Capitânia Investimentos, completing a long-anticipated exit from one of Brazil’s largest shopping centers and setting the stage for a substantial cash distribution to shareholders. The transaction was closed simultaneously with signing, according to the company’s disclosure.
Deal Structure and Early Settlement
The sale price comprises an upfront payment of R$805 million, with the remaining balance originally structured in four annual installments. Guararapes opted to anticipate the full amount, discounting the future receivables at IPCA +10.57% per year or NTN-B 2028 +2.05%, whichever is higher. The early settlement reflects a deliberate strategy to capture tax efficiencies, reduce financial expenses and mitigate risk, converting long-dated real estate proceeds into immediate liquidity.
Extraordinary Distribution Defined
Alongside the transaction, Guararapes announced a total cash distribution of R$1.488 billion, equivalent to R$2.98 per share and implying a dividend yield of roughly 28% at current prices. Of this amount, R$413.3 million will be paid as interest on equity (JCP), with the remainder distributed as dividends. Payments are scheduled in three tranches, including R$1.075 billion on December 30 and R$413 million on January 5.
Valuation Reset After Asset Sale
With the transaction value confirmed, analysts at XP revisited their previous assessment of the group. The implied valuation of Guararapes’ remaining business falls to 7.1x, compared with 8.7x prior to the announcement, after accounting for transaction-related taxes. XP noted that the extraordinary payout is broadly in line with earlier expectations, which pointed to a one-off dividend yield in the 20%–30% range.
Strategic Rationale and Market View
The disposal of Midway Mall had long been seen by investors as a necessary step to simplify Guararapes’ corporate structure and sharpen focus on its core apparel and retail operations. While the asset was high quality, it tied up capital with limited operational synergies. Analysts also highlighted the company’s decision to maximize tax efficiency ahead of potential dividend taxation from next year, while preserving flexibility to fund store renovations, expansion plans and strategic initiatives without materially increasing leverage.
BTG Pactual advised Guararapes on the transaction and structured the early payment operation, with legal counsel provided by Cescon Barrieu.
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