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GPA considers postponing offer after share price surge

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GPA, the retailer that owns the Pão de Açúcar chain, is considering postponing the primary public offering of shares communicated to the market in December, which could reach an estimated value of R$1 billion, sources familiar with the matter say.The assessment is that the company is not very comfortable with the recent volatility of the share price and the dynamics of investors in the short position, in a scenario in which the share was heavily traded by investors, said a person familiar with the matter. "We have mapped the demand, but we will decide [whether to move forward with the offering] by the end of the week," said the source.From December 10, the day the offering was announced, to January 11, the stock fell about 9%—this year, the common shares fell from January 4 to 11—until it recovered its price from the end of last week. Between Friday’s and Monday’s trading sessions, the stock rose more than 36% after the market was informed by buy-side analysts that the offering was on hold. The rise took by surprise those who shorted the stock, one asset manager said.The retailer’s shares are among the most borrowed on B3, about 23% of the shares in circulation. Borrowing is a way of betting against a company, and for this the investor ("short seller") must pay a fee to the owner of the share. Any rise in the price directly affects short sellers.According to the offering announcement, the conditions presented would lead to a strong dilution of the shareholders who failed to join the operation, in the range of 50%. This would result in a significant reduction in Casino’s position in the company to nearly 20% from 40.9%.The intention of the offering would be to seek greater balance in the company’s capital structure, with the use of funds to reduce the level of debt, one of the aspects of market attention in relation to GPA today.But there is another point to consider...

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