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Garnero Group to Merge with Grupo Colombo, Deal Value AT $330M

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Garnero Group Acquisition Company (NASDAQ: GGAC), a public investment vehicle formed for the purpose of effecting a merger, acquisition or similar business combination, and Grupo Colombo ("Grupo Colombo" or "GC"), a leading apparel retailer in Brazil, announced today that they have entered into a definitive investment agreement to merge the companies in a transaction valued at approximately $330 million. The combined company will remain listed on the NASDAQ Stock Market and be renamed "Garnero Colombo Inc."

Headquartered in Sao Paulo, Grupo Colombo is one of Brazil's leading retailers focusing on menswear, with over 400 stores throughout the country. Founded in 1917, Grupo Colombo is the largest retailer of men's shirts and suits in Brazil with net revenues of R$550 million ($234 million1) and EBITDA2 of R$133 million ($57 million) in 2014. GC has recently diversified from formalwear into smart casual clothes and has strengthened its online presence to become one of the three most valuable brands within the Brazilian apparel retail sector.

Transaction Summary

Pursuant to the terms of the proposed business merger, GGAC will become the owner of 100% of the equity of GC by issuing 6,000,000 GGAC shares to GC's existing shareholders. After the closing of the transaction, the current shareholders and management of GC will own approximately 25%3 of the combined company.

In connection with the transaction, the companies have engaged a syndicate of global investment banks to raise up to $100 million in a private placement of new GGAC shares to close simultaneously with the business combination. Additionally in support for the transaction, the shareholders of GC have committed to purchase $30 million of GGAC shares in the public market or through the private placement.

Mario Garnero will remain Executive Chairman of Garnero Colombo Inc. and Alvaro Jabur Jr., GC's Chief Executive Officer, will be appointed as Member of the Board of the merged company. Mr. Jabur will keep his role as Chief Executive Officer to manage the operation in Brazil with the current senior management of Grupo Colombo.

The boards of directors of both GGAC and Grupo Colombo have unanimously approved the terms of the transaction, which is expected to be completed by year's end. The transaction is subject to GGAC shareholder approval, applicable regulatory approvals and other customary closing conditions.

"I created GGAC to pursue business opportunities that would provide long term growth and shareholder value," said Mario Garnero, Executive Chairman of GGAC. "The Colombo brand is highly regarded and we believe the cash infusion, without further changes to operations, will result in immediate and significant improvement in bottom line results."

"We are excited to partner with the GGAC team and to be a public company with access to public markets," said Alvaro Jabur Jr., CEO of Grupo Colombo. "A stronger balance sheet will improve our pricing, our operating results and provide the capital we need to grow through additional store openings and acquisitions."

UBS Investment Bank is acting as M&A advisor to Grupo Colombo and EarlyBirdCapital, Inc. is acting as M&A advisor to GGAC. McDermott Will & Emery and Souza, Cescon, Barrieu & Flesch are acting as legal advisors to Grupo Colombo and Graubard Miller and Maples & Calder are acting as legal advisors to GGAC.

The description of the transaction contained herein is only a summary and is qualified in its entirety by reference to the definitive agreement relating to the transaction, a copy of which will be filed by GGAC with the SEC as an exhibit to a Current Report on Form 8-K. Interested parties should visit the SEC website at www.sec.gov.

The GGAC shares offered in the private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy GGAC shares, nor shall it constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is unlawful.

 

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