M. DIAS BRANCO S.A. (“M. DIAS” or “Company”), pursuant to Article 157, Paragraph 4 of Law 6,404 dated December 15, 1976, and amendments thereto, and Instruction 358 issued by the Securities and Exchange Commission of Brazil (“CVM”) dated March 1, 2002, and amendments thereto, hereby informs its shareholders and the market the following:
M. DIAS BRANCO, through its subsidiary Indústrias de Alimentos Bomgosto Ltda – Vitarella (“Buyer”), executed on this date a Stock Purchase Agreement and other Covenants (the “Agreement”) for the acquisition of all shares representing the capital stock of NPAP Alimentos S.A. (Corporate Taxpayer ID – CNPJ number 04.723.759/0001-53), a company producing and marketing biscuits and pasta (“PILAR”), with headquarters located at Rua do Pilar, nº 84/98, Polígono C, in the city of Recife, state of Pernambuco (http://www.pilar.ind.br) on an own property with total area of approximately 32,000 sq.m.
The acquisition was concluded at the maximum amount of sixty-nine million, nine hundred twenty-two thousand reais (R$ 69,922,000.00), of which (i) forty-five million, seventy-two thousand (R$ 45,072,000.00) will be paid in cash on the present date; (ii) three million, eight hundred and fifty thousand (R$ 3,850,000.00) will be paid within ninety (90) days, excluding the amount required to constitute an adequate provision for doubtful accounts; and (iii) the remaining balance, of up to twenty-one million reais (R$ 21,000,000.00), will be paid after six (6) years, excluding the amount of contingencies arising from events or facts that come to occur until the execution of the Agreement and that come to be required from the acquired company. The acquisition will be submitted for ratification by the Extraordinary Shareholders Meeting convened for this purpose, in accordance with Paragraph 1, Article 256 of Law 6,404/76 and the approval of the Administrative Council of Economic Defense (CADE), Brazil‘s antitrust agency.
The company acquired began its activities in the 19th century, in 1875, and has one hundred and thirty-six (136) years of existence, making it one of the oldest pasta and biscuit companies in Latin America. The owner of the brand PILAR, it manufactures and sells biscuits and pasta, and recorded net revenue of R$ 107.5 million in 2010. With this acquisition, the M Dias Branco Group will increase its share in Brazil in the biscuit market from 22.2% to 23.4% and in the pasta market from 22.4% to 24.7% (AC Nielsen, Jan-Feb 2011). The transaction is part of the Company‘s strategy to actively participate in the consolidation of the industry, expanding its national leadership in the biscuit and pasta segments.
The transaction also will add value through efficiency gains at the Company‘s mills and vegetable fats production unit, effectively strengthening its position in Brazil’s Northeast.
More details on the transaction will be made available at our 1Q11 results conference call (11:00 a.m. on May 3, with simultaneous interpretation) and in the public meeting sponsored by the Capital Market Professionals and Investors Association (APIMEC) in São Paulo (4:00 p.m. on May 3, at the Hotel Staybridge) and in Fortaleza (7:00 p.m. on May 5, at the Hotel Praia Centro).
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