Leveraged Hypermarcas Unloads Six Brands

Hypermarcas, which has seen its leverage levels rise of late, has decided to divest 6 different brands along with their respective operating assets for a combined BRL305m ($167.4m). The owner of various Brazilian consumer brands signed an agreement to sell the Etti, Salsaretti and Puropore food product brands to Swiss-based agribusiness and food company Bunge for BRL180m ($98.8m). It will also separately sell household cleaning brands Assolan, Perfex and Cross Hatch to Quimica Amparo, a home cleaning and personal hygiene products company, for BRL125m ($68.6m). Officials at Hypermarcas decline to offer additional details of the transaction or indicate if any advisors were used for the deal. Hypermarcas has seen its operating performance suffer of late as a result of its more restrictive sales terms with wholesalers, according to Moody’s latest credit opinion published November 9. Moody’s data show the company’s Ebitda margin stood at 23.2% in September, down from 24.3% in 2010 and a much higher 25.4% in 2008. The company’s leverage has also grown considerably, due in large part to an aggressive campaign of acquisitions. As of September, Hypermarcas had leverage, as measured by adjusted debt to Ebitda, of 6.4x, up from 5.2x in December 2010, according to Moody’s.