Mergers and acquisitions set to change the shopping mall landscape in Brazil

After living its worst moment during the pandemic, the shopping center industry is moving into a new phase in 2022, marked by tactical mergers and acquisitions that aim to consolidate and expand companies’ portfolios amidst the recovery of the sector.

According to the Brazilian Association of Shopping Centers (Abrasce), shopping centers saw their revenues drop 33% in 2020 at the heights of the Covid-19's restrictions, which also escalated challenges that the industry was already facing before the pandemic, such as the rise of e-commerce and shrinking foot traffic.

Now, as the market is slowly recovering to pre-pandemic levels – the sector sold R$ 159,2 billion in 2021, a 23,6% growth in comparison to 2020, and is set to sell R$ 181 billion in 2022, according to Abrasce – the main shopping center administrators in Brazil are looking at the market seeking acquisition opportunities, as well as ways to reinvent their business models.

Iguatemi, for instance, one of the main groups in the segment that owns Iguatemi São Paulo, JK Iguatemi, Pátio Higienópolis, amongst others, launched in the ending of 2019 its own e-commerce that works an extension of their physical shops with a special curatorship.

“The combination of physical and digital is powerful and helps us to convert and also to have a closer bond to the client”, stated Christina Betts, CEO of Iguatemi. “And, besides giving exposure to lesser-known brands, this format allows us to change the products and have a multi-brand store that always has new releases”, she added.

Now, as they further structure their marketplace, they have also announced a corporate restructuring that incorporated Iguatemi’s shares to the Jereissati Participações’ holding, a move that favors its goal to be one of the protagonists of the new wave of mergers and acquisitions in the market.

“We did this reorganization to unlock the growth of the company”, stated Iguatemi’s CFO, Guido Oliveira. “We are in the game and attentive to the consolidation movements in the market. We will not let the horse pass and that is why we anticipated this scenario.”, he added.

Aliansce Sonae and BrMalls, two giants in the sector, also sent shockwaves throughout the market in recent weeks after a long flirtation with a possible mega-merger between the companies that ended up with two rejected proposals by BrMalls.

After buying 5% of the company’s shares at B3 in February, Aliansce hoped to build a coalition of investors to approve the merger. However, the initial proposal was rejected by BrMalls, who claimed that the amount suggested was low and inadequate and, even after a 10,9% adjustment of the price, BrMalls also rejected the second proposal, that reached the R$ 1,8 billion-mark, in addition to 276.762.914 emission shares of ALSO.

When the offer was announced, BrMalls’ stock prices went up 24%, while Aliance’s, 17%, which indicates that the market believes that the deal can bring value to both sides.

Por: Ana Luisa Ferrari