June 7, 2019 / 3:02 PM / 8 days ago

UPDATE 1-Shares of Brazilian mall operator Aliansce jump after Sonae Sierra merger deal

(Adds analysts’ comments and details of the deal)

By Gabriela Mello

SAO PAULO, June 7 (Reuters) - Shares of Brazilian malls operator Aliansce Shopping Centers SA were up 7% in Sao Paulo stock exchange, at 23 reais, after the announcement of a merger with smaller rival Sonae Sierra Brasil S.A..

As part of a share-swap deal, Aliansce shareholders will hold a 68% stake of the combined group, which will be renamed Aliansce Sonae Shopping Centers SA, according to a securities filing on Thursday night. Sonae shareholders will hold the remaining 32.1% stake.

The transaction is still subject to approval by shareholders assemblies and regulatory authorities in Brazil.

Aliansce shareholders that prefer to sell their shares rather than approve the merger will receive 12.60 reais per share, according to the filing.

If the transaction is completed, the combined company will own 40 malls and become Brazil’s second-largest mall group in terms of gross leasable area, with a total of 7,000 stores.

Together, Aliansce and Sonae reported total sales volume of approximately 14.8 billion reais ($3.83 billion) in 12 months, with a combined net revenue of 876 million reais.

Cost savings stemming from the combination may reach up to 70 million reais, the companies said.

In a note to clients on Friday, analysts at Credit Suisse said the transaction should unlock value to Aliansce shareholders and reinforce their view of their shares as a top pick in the industry.

Shares of Sonae Sierra were down 3.65% down this morning at 28.81 reais.

$1 = 3.8596 reais Reporting by Gabriela Mello Editing by Chizu Nomiyama and David Gregorio

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