Pet Retail Market and Valuation Outlook
Appendix 23
100
23. "What if?" Analysis (A)
Accretion/Dilution Analysis
Earnings Per Share
Petz Net Earnings
Cobasi Net Earnings
Pro Forma Net Earnings
Petz Shares O/S
Cobasi Share O/S
Pro Forma Shares O/S
Petz EPS
Cobasi EPS
Pro Forma EPS
Accretion/Dilution
% change
We understand that in a highly pulverized sector, the possibility of a merger
between the two most prominent players is exceptionally high, given that
both today represent only 13.4% of the market share (in this case, CADE won't
be barrier). Thus, we decided to simulate a merger between Petz and Cobasi
as a brainstorming exercise. Together the brands would have 292 stores, with
exceptional bargaining power with suppliers and a high capillarity in the state
of São Paulo, which would help facilitate the national expansion plan, with an
opening of 60-80 stores per year. In addition, we see many synergies in this
merger, a cost-cutting of Cobasi's veterinary services, implementation of
private label at Cobasi, as well as cuts with SG&A. Therefore, we made some
assumptions to project the merger. First, we considered that both brands
should be maintained independently, given the relevance of both in the
national scenario. The second point was to assume a 100% stock merger,
given that this is the most likely scenario to occur, with the Cobasi's
management staying in the NewCo. Finally, we thought that Cobasi should
grow at the same pace as Petz in this expansion across the country.
75
50
25
0
Source: Company's Data; Diário Oficial; Team 7
21E
22E
23E
24E
25E
26E
27E
28E
29E
30E
95,635 163,597 218,914 314,025 435,002 554,588 653,361 761,977 880,238 960,707
88,854 115,623 154,850 187,460 259,664 342,403 419,134 491,245 629,247 712,248
225,673 348,570 471,193 628,660 863,576 1,108,382 1,328,742 1,557,740 1,853,536 2,049,875
393,991 434,991 434,991 434,991 434,991 434,991 434,991 434,991 434,991 434,991
30,274 30,274 30,274 30,274 30,274 30,274 30,274 30,274 30,274 30,274
424,265 465,265 465,265 465,265 465,265 465,265 465,265 465,265 465,265 465,265
0.2
0.4
0.5
0.7
1.0
1.3
1.5
1.8
2.0
2.2
2.9
3.8
0.5
0.7
87
5.1
6.2
8.6
11.3
13.8
16.2
20.8
23.5
1.0
1.4
1.9
2.4
2.9
3.3
4.0
4.4
0.3
0.4
0.5
0.6
0.9
1.1
1.4
1.6
2.0
2.2
119.1%
99.2% 101.2%
87.2% 85.6%
86.9% 90.1% 91.1% 96.9% 99.5%
Google Trends
Brands Recognition
Petz -Cobasi
100
11/16 09/17 07/18 05/19 03/20 01/21
New Co. Stores DistributionView entire presentation