Magalu Asks to Issue 1.55 Billion Shares

BRAZIL · COMPANIES

Magazine Luiza, known as Magalu, wants shareholder approval to issue up to about 1.55 billion new shares without a further change to its bylaws, its internal rulebook. The company has not announced a capital raise, but the vote on 2 December will set how much room it has.

Magazine Luiza (Magalu), a São Paulo-listed appliance and electronics retailer that reported a third-quarter loss on Monday, is asking shareholders for a very large share-issuing licence. Its board approved a change to the bylaws, the company’s corporate statute, that would allow up to about 1.55 billion new common shares, equal to 200% of today’s share base.

The change would also drop the poison pill, a rule that forces an investor reaching 20% of the capital to make a takeover offer. Shareholders vote at an extraordinary general meeting, a special shareholder vote, on Wednesday 2 December 2026 at 3:00 p.m. Brasília time (1:00 p.m. ET), online only.

The story matters most to investors in Brazilian equities and in emerging-market funds. Magalu has not announced a capital raise.

What the Board Is Asking For

The proposal sets a ceiling, not a plan: Magalu could issue shares up to the limit without calling another meeting. Magalu has not said whether it will raise money, how much, or when.

Removing the poison pill matters as much as the share limit. Without it, an investor could build a stake above 20% without triggering a mandatory offer for the whole company.

Results, Upgrades and a Sharp Rally

Magalu published third-quarter results on Monday 9 November 2026, showing a net loss of R$10.7 million (about US$1.9 million) after a profit of R$84.6 million (about US$15 million). One-off items drove the loss, and adjusted profit, which excludes them, was R$13.9 million (about US$2.5 million).

The shares closed at R$5.61 (about US$0.99) on Friday 6 November and at R$7.66 (about US$1.36) on Wednesday 11 November, a rise of more than a third. Monday and Tuesday closed at R$5.84 (about US$1.04) and R$6.52 (about US$1.16).

On Thursday 12 November the shares traded higher early, then fell. In late trading at 3:43 p.m. ET they stood at R$7.07 (about US$1.25), down 7.7% from Wednesday’s close, and we found no company statement explaining the drop.

Why It Matters

Issuing new shares lets a company raise cash, but it shrinks the slice owned by holders who do not buy more. JPMorgan, a US bank that rates the shares underweight, a sell-equivalent rating, calculates that using the whole limit would dilute holders who stay out by about 67%, in theory.

That compares with a limit of 200% of the current share base and a potential raise near R$12 billion (about US$2.1 billion). JPMorgan judges full use unlikely in the short term and sees any deal arriving gradually or as a hybrid that keeps subscription rights, the right of current holders to buy new shares first.

The bank’s report puts net debt, borrowings minus cash, at R$3.1 billion (about US$0.55 billion) at the end of September. It adds about R$7 billion (about US$1.2 billion) of discounted receivables, customer credit sold early at a discount, and financial expenses still absorb over 100% of operating profit.

Why Two Banks Turned Positive

Goldman Sachs, a US investment bank, raised Magalu from neutral to buy, with a target of R$11.50 (about US$2.04) from R$6.30 (about US$1.12). That target is about 50% above the latest close Goldman used.

Goldman points to Casas Bahia, a rival retailer in court-supervised restructuring, which Goldman assumes will close 298 stores. It estimates this frees about R$5.7 billion (about US$1.0 billion) of annual sales, of which Magalu could win about R$1.5 billion (about US$0.27 billion).

Goldman cites preliminary October data: Magalu’s own online sales rose 14% from a year earlier, against 5% in September. Store sales rose 16%, against 12% in September.

The strongest counter-view to JPMorgan’s caution comes from Bank of America, a US bank, and Goldman Sachs, which both rate Magalu a buy. Bank of America upgraded the stock earlier this week.

What to Watch Next

The first checkpoint is the shareholder vote on Wednesday 2 December 2026 at 1:00 p.m. ET, held online. No date has been published for management details.

JPMorgan says removing the poison pill may ease the entry of a strategic shareholder, an investor taking a lasting stake. It awaits more detail from management before changing its view.

Who Is Affected

The proposal matters most to holders of MGLU3, Magalu’s ticker on São Paulo’s B3 stock exchange, including emerging-market funds that own it. Holders who skip any future issue would bear the dilution.

What Is Not Known

Whether Magalu will raise capital, and its size and timing, is open. Nor is it known who a strategic shareholder could be.

We found no company statement explaining Thursday’s 7.7% fall, so its cause is unknown. Nor has Magalu published a date for management to give details.

Conversions use R$5.64 per US$ (market data provider, 12 November 2026). Figures in US$ are rounded.

More: Brazil news, every day from The Rio Times.

Frequently Asked Questions

What is Magalu asking shareholders to approve?

It wants to change its bylaws to allow up to about 1.55 billion new common shares, equal to 200% of today’s share base. The proposal also drops the poison pill, which forces a takeover offer at 20% ownership.

When do Magalu shareholders vote?

Shareholders vote on Wednesday 2 December 2026 at 3:00 p.m. Brasília time (1:00 p.m. ET), online only. The company has not announced a capital raise.

How much dilution could the new limit cause?

JPMorgan calculates about 67% dilution for holders who stay out if the whole limit were used, which it calls theoretical. It judges full use unlikely in the short term.

Sources: Magazine Luiza board proposal and extraordinary general meeting notice; JPMorgan, Goldman Sachs and Bank of America research reports; market data provider prices (closes to 11 November, Thursday reading at 3:43 p.m. ET).