Cantu Store – the largest tire retailer in the country – has just acquired GP Pneus, the second largest in the sector, in a transaction of over R$ 1 billion that creates a player with 12% market share in the tire market.
With the transaction, Cantu becomes three times larger than the second place, DPaschoal, which has an estimated 4% share.
Cantu earned R$ 3.5 billion and sold 6.5 million tires in the last twelve months. GP, on the other hand, earned R$ 1.5 billion and sold 3.5 million tires in the same period.
Cantu is paying R$ 800 million in equity – R$ 350 million in cash and the rest in shares – and assuming an additional R$ 280 million in debt, giving GP an enterprise value of R$ 1.080 billion.
The three partners of GP – families from Santa Rosa, in Rio Grande do Sul – will have 9.2% of the new company, which was valued at R$ 5 billion.
“With this acquisition, we become not only the largest player in Brazil, but also in Latin America. The second largest player is Mexican, Tire Direct, which has a turnover of $500 million, and we are approaching $1 billion,” Beto Cantu, the founder and CEO of Cantu Store, told the Brazil Journal.
The transaction also marks Cantu’s entry into physical retail.
Until now, the company only sold its tires online, through a B2C platform and another for distributors and corporate fleets.
GP has 117 stores – some with Pirelli and Bridgestone banners – in addition to selling to distributors and fleets.
Beto also said that GP has two other strengths that made it an attractive target.
The company has exclusive distribution in Brazil of Fate tires, an Argentine brand that is highly consumed in the country; and a very strong presence with premium brands, selling Pirelli, Bridgestone, and Continental tires in all three of its channels. (Cantu has a contract that allows it to sell these premium brands only in ecommerce).
“The Fate brand is very popular in Brazil because it is a brand with great cost-benefit. It is a brand that is not budget, nor premium, but has a lot of quality and an affordable price,” he said.
Beto intends to keep the two brands separate and with independent management. “We will seek back office and sales integrations, but the commercial part will be 100% separate,” said the founder.
The acquisition is the fourth (and largest) in Cantu’s history, which Beto founded in 2007 when he was 24 years old.
In 2023, Cantu paid R$ 108 million for Gripmaster, the leader in tires for mining and industries. Previously, it had acquired Verum, a technology platform that handles ecommerce operations backend; and DigiTire, an American tire retailer.
Beto said that the idea now is to focus on integrating the acquired assets, and that Cantu is unlikely to make a new acquisition in the short term.
“The merger with GP has always been our top priority. It is the jewel of the sector and the most complementary company to Cantu, with the closest culture,” he said. “Now, the total focus is on integrations, on building this platform.”
To finance the acquisition, at the beginning of the month, Cantu raised R$ 650 million with its third debenture issuance: a series of 7 years at CDI + 2%, and a series of 5 years at CDI + 1.85%.
Itaú BBA, UBS BB, Bradesco BBI, Safra, and Caixa coordinated the offer and retained most of the paper.
Two years ago, the company had already raised R$ 600 million in equity with the private equity manager L Catterton, which now holds about 22% of the capital and is the co-controller of the company after today’s transaction.
Beto said that Cantu’s 40% annual growth will require complementary financing strategies, whether through debt or equity. “The IPO is one of the sources we can have, but we can also seek new funding with funds or even with the company’s partners, who are well capitalized,” he said.
Itaú BBA and Demarest Advogados advised Cantu.
Fausto Lellis Advogados advised GP Pneus, which did not work with a financial advisor.
Source
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
