So the essentials of the deal are as follows:

• CPALL agreed with MAKRO’s major shareholder, SHV Nederland B.V., to acquire its 64.35% (154.4m shares) in Makro @ THB 787/share.
• Funding is 90% debt financing, 10% internal CF, no equity capital call.
• Purchase price of MAKRO is @ 42.9x of 2013F (as per analyst’s estimates)
• Debt boosts net d/e to 5x, cpall expects debt/ebitda to declinef from 6x to 3x within 3years

What do we care about:

• No equity dilution
• 2014 – first year of full consolidation
• Similar deal size was BIGC and Carrefour 2 years ago and look how well the stock has performed (no equity dilution either)

So what?

• Well on the simplest basis we just combine the two net profits and see what the impact is on CPALL’s #’s are, its as basic as that and as long as there isn’t any equity call then on a 3-12 month basis we are very happy holders of cpall.