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Proposed Purchase of Lopes Trademark License
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Proposed Purchase of Lopes Trademark License
Investor Relations
June 2011
Purchase Proposal of Lopes Trademark
Gains Through the Lopes Trademark Aquisition:
Improving Corporate Governance and alignment of interests between shareholders.
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between shareholders.
Acquisition of one of the most recognized brands in the market without the need for investment in a new brand.
Fair value of the Acquisition and that adds value to the Company.
2011
is half the length of the contract
The committee established to solve thisissue consists of:
• Alcides Tápias• Martín Lifchitz
• Maurício Almeida Prado
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PriceNegociationthrough theMinimumAverage =R$44.7 MM*
The approval of the transaction will take place in the General Shareholders Meeting with a vote of minority shareholders only.
Although the CEO and COO of the Company do not have any direct economic relationship with the ownership of the brand nor the result of this operation, they will choose to abstain from their vote in the, as well as abstained from the decision making process of the previous steps.
* 30% in cash and 70% in stocks or cash, according to the company.* 120 days Lock-up after settlement of the transaction to Rosediamond, Marcos Lopes and Francisco Lopes (direct or indirectly).
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Brand Rating fromthree out of “The Big
Four”
� KPMG� Price� E&Y Terco
Lopes Brand Recognition
Lopes is now the 25th most valuable brand in Brazil
4Source: Interbrand
Lopes Brand Value:
R$ 87 million
Investment for Launching New Brands in Brazil – Benchmarks*
19.7
28.1
Year 2
Year 1
36.6
54.7
Year 2
Year 1
Values in R$million
81.6
18.8
Year 2
Year 1
172.7
107.8
Year 2
Year 1
167.8Year 1
5
21.8
31.2
Year 2
Year 1
11.3
40.6
Year 2
Year 1
* Source: Borghierh/Lowe
26.5
167.8
Year 2
Year 1
32.0
49.6
Year 2
Year 1
The multinational agency Borghierh/Lowe, has two offices in Brazil, is the 3rd in the Ibobe Ranking Monitor, with 23clients in its portfolio, such as: Unilever, Ministério da Saúde e Johnsons&Johnsons. It was founded in 2005 by JoseBorghi and Erh Ray - both recognized by the market and winner of many Cannes awards, besides haven takenpart of the festival’s jury.
Lopes Brand Valuation Summary
MinimumR$ MM
MaximumR$ MM
56.8
40.6
87.6
60.4
Independent auditing companies valuation results:
April /11
6
40.6
36.8
60.4
43.3
Average: 54.3
April /11
May /11
Average of theMinimum = R$44.7 million
Value to be paid
Average of theMaximum = 63.8
Royalty Relief Method –standard method for IFRS
accounting* The valuation reports are available for shareholders. Please contactthe IR department.
Benefits from the End of the Current Royalties Contract
The present value1 of the payments of the current contract added to a hypothetical renewalin 2016, maintaining the same CAGR2 and perpetuating at ¼ of the current CAGR, is R$54.1
million, R$9,4 million higher than the acquisition value.
Financial BenefitR$ millions
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44.7 54.1
9.4
Value to be paid Present Value of Current Royalties Contract
Financial Benefit
Considers the renewal of the current contract for 10 more years growing by CAGR during theperiod of the contract - from 2009 to 2016 - and ¼ of this same CAGR in the perpetuity.
1- Present Value using the average rate of the three evaluating companies with no inflation2- CAGR without inflation.