SAO PAULO: Hypermarcas , the largest Brazilian producer of disposable consumer goods, said it struck a deal to sell a group of household goods brands to a local rival as it focuses on more profitable business segments,
Hypermarcas will sell powdered soap, insecticide and detergents brands to local home cleaning goods producer Flora for 140 million reais ($79 million), according to a regulatory filing on Monday.
Flora is owned by the controlling shareholders of JBS, the world's biggest beef processor.
Concerns that Hypermarcas is overstretched and loosely focused have driven a 60 percent tumble in its stock this year. Investors are pressing management, led by Chief Executive Claudio Bergamo, to divest some of the company's more than 200 brands and integrate more rapidly some of the firms it gobbled up over the past four years.
"This decision is in line with our goal of focusing efforts on the pharmaceutical and personal hygiene segments, as well as to deliver on the integration of all the units acquired since 2008," Hypermarcas said in the filing.
The company's shares were up 1.3 percent to 9.23 reais, their first gain in three sessions.
The Sao Paulo-based company's woes highlight just how quickly confidence in Brazil's economy is eroding as years of fast growth show signs of strain. Some investors fear Bergamo will have to integrate the 30-plus takeovers of recent years and cut debt in a much tougher economic environment.
Hypermarcas became the largest Brazilian disposable consumer goods maker after buying dozens of well known but underperforming brands in the medicine, beauty, processed food and home cleaning sectors.
Hypermarcas, whose main focus is Brazil's emerging middle class, became the country's third-largest generic drugs maker in 2010. It now sells more condoms, sweeteners, hangover pills, shaving cream and lotions in Brazil than anyone else.
Yet disposing of brands at such a pressing time is complicated, and bidders could be tempted to underpay for the assets, analysts said.
Morgan Stanley analyst Lore Serra said in a recent report that "Hypermarcas' portfolio is complex," which could make it difficult for management to attain a dual goal of selling high and sharpening the company's business focus.
A source close to the company told Reuters last week that the sale of the Assim, Sim, Gato, Fluss, Sanifleur and Mat Inset brands would take place before the end of the month.
Other divestitures include the sale of steel wool producer Assolan, which could fetch about 400 million reais, according to some analysts.
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