Rexel sells Latin-American business to Sonepar
Rexel is ending its involvement in Brazil, Chile and Peru and wants to concentrate fully on the regions of Europe, North America and Asia/Pacific in future.
According to the company’s own statement the sale of its activities in Latin America only represents approx. 40% of the companies which are to be sold in total by the end of 2016 in order to be able to focus on the three named main markets from then on.
The grateful purchaser is its great rival Sonepar, which is paying USD 51 m (EUR 47 m) for Rexel’s Latin American business. The transaction still has to be approved by the cartel authorities.
Brazil, Chile and Peru together contributed EUR 256.8 m (minus 3.8% in comparison with the prior year) to Rexel’s total turnover in 2014 (2% of the consolidated corporate turnover).
The EBITA relating to these three countries recorded a loss of EUR 3.3 m in 2014 (compared to a profit of EUR 0.8 m in 2013).
With regard to Brazil, which accounts for practically 60% of the activities in Latin America, the original investment criteria and growth expectations were seen at Rexel as not being fulfilled any more at present, so that remaining in the country is no longer justifiable. Chile and Peru, whose combined turnover lately stood at approx. EUR 100 m, are after all relatively small markets with limited opportunities, so that the decision has been made to withdraw from here as well and thus end its activities in the whole of Latin America.
The sale is likely to mean a pre-tax loss of about EUR 70 for Rexel. With regard to the consolidated annual balance sheet for 2014 this would result in a 5% drop in turnover and a moderate growth in free cash flow before interest and tax.