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Carlyle Buys Controlling Stake in Brazilian Furniture Retailer

13 September 2012

(New York Times) September 13, 2012 – The Carlyle Group said Thursday that it had acquired a 60 percent stake in Tok & Stok, a Brazilian furniture company, in a move that positions it to take advantage of the country’s consumer retail market.

It is the second such deal Carlyle announced in this sector in the last two weeks. Earlier this month, Carlyle said it had acquired a 25 percent stake in the Brazilian equipment rental company Grupo Orguel.

The amount Carlyle paid for Tok & Stok was not disclosed, but a source with knowledge of the deal told DealBook that it was approximately 700 million reais, or $347 million. The person spoke on the condition of anonymity because the terms were private. The news of the deal was earlier reported by the Brazilian newspaper Valor Economico.

Regis and Ghislaine Dubrule, the French couple who founded Tok & Stok, will retain 40 percent control. Ms. Dubrule will become chief executive, taking over for her husband.

The deal is subject to approval by Brazilian regulatory authorities but is expected to close in the fourth quarter of this year.

Tok & Stok, founded in 1979 and based in Barueri, in Sao Paulo State, said it generated about 1 billion reais, or $495 million, in sales last year.

It has 35 stores in Brazil and 3,300 employees. Most stores are in the country’s southeast region, so the company needs to increase its presence in Brazil’s north, a major source of the country’s emerging middle class.

Various Brazilian investment firms had approached Tok & Stok about equity investments over the last 12 years, according to a second source, a Brazilian investor with direct knowledge of the talks. But the owners had held out until now.

The investor added that, “I like this deal and the space and think the company will either I.P.O. or get sold to Ikea.”

Carlyle will finance the acquisition through its South America Buyout fund and the Fundo Brasil de Internacionalizacao de Empresas, a local fund advised by Carlyle and Banco do Brasil.

The two deals this month show that Carlyle is keen on a growing sector, said Cate Ambrose, head of the New York-based Latin American Private Equity and Venture Capital Association. “Carlyle is focused on domestic consumption and bidding aggressively to get these opportunities,” she said. “It’s a direct reflection that retailing is a really big opportunity in Brazil.”

In a recent Latin American Private Equity Survey, conducted by Ms. Ambrose’s group and Coller Capital, about 70 percent of local and foreign funds interviewed said the most attractive sector for private equity investment in Latin America over the next three years would be consumer retail.