Saraiva acquires Siciliano

Siciliano, a traditional Brazilian bookstore chain founded in 1928, owns 52 stores and 11 franchisees, being present in 13 of the Brazilian states and also in Brasilia, Brazil''s capital.

Siciliano and Saraiva''s operations are complementary, with low overlapping in terms of stores and a high level of synergy. Siciliano stores are located in important commercial areas where Saraiva does not have a significant penetration.

The investment planned by Saraiva in Siciliano''s operations may significantly improve its operating performance and represents important gains to Saraiva''s shareholders. The table below provides a comparison between Saraiva and Siciliano''s key performance indicators:

Indicator Saraiva Siciliano (1) Gross Sales per m2 (12 months ended Dec. 2007) R$ 14.8 thousand/year R$ 9.0 thousand/year EBITDA 9M 2007 R$ 27.4 Millions R$ 4.0 Millions EBITDA margin 9M 2007 8.8% 4.0% (1) Not Audited.

The equity price ("price") paid by Saraiva was R$ 60.0 million. Saraiva also took on Siciliano''s net debt (not audited) of R$ 13.6 million as of December 2007. Siciliano gross revenues in 2007 (not audited) reached approximately R$ 156 million, with R$ 151 million from its retailing operations and R$ 5 million from its publishing business, which include publications under the Arx, Futura, Caramelo and Arxjovem brand names.

The price is still subject to further adjustments due to variations in Sicilianos''s net debt position as well as its working capital between November 30, 2007, and the present date. Such eventual price adjustment will be announced to the market in a timely manner.

Livraria Saraiva will invest decisively in order to give Siciliano''s clients an even more complete purchase experience. Saraiva not only will increase Siciliano''s SKUs, but also invest in the qualification of its personnel and implement high value-added services for its clients. Siciliano''s best practices will be kept and incorporated into Saraiva''s existing routines.

With this acquisition, Livraria Saraiva (i) shows its confidence in the future of the book retailing market and in the growth of the Brazilian publishing sector, (ii) fosters an interest in culture by enhancing the purchasing experience of Siciliano''s clients, (iii) reconfirms its expansion strategy, increases and strengthens its chain, aimed at providing a better service to its clients, (iv) seeks scale gains, and (v) increases its client base.

More on Livraria Saraiva

Livraria Saraiva''s mission is to guarantee the best experience and be the first resource of customers who look for culture, leisure and information. Besides its physical store chain -- 36 stores in December 2007 -- Livraria Saraiva has an e-commerce website operation at , which contributed roughly one third of the Company''s gross revenue in 2007.

The Company''s pioneering strategic movements have been an important factor for its business success. The Super Store concept was introduced in Brazil by Saraiva in 1996 and the Company was one of the first online book retailers.

Saraiva''s product mix is complementary. Besides books, the Company offers to its clients a complete catalog of CDs, DVDs, magazines, stationary, select electronics items and information technology. Its catalog has almost 1.5 million items. In 2007 the Company organized nearly 2.7 thousand events in its stores and received more than 20 million visits.

More on Livraria Siciliano

Siciliano was founded in 1928 by Pedro Siciliano and, in the early years, sold only newspapers and magazines. The first bookstore was opened in the city of Sao Paulo in 1942, and it was the beginning of one of the largest bookstores chains in Brazil. In 1998 the Company started its editorial business, publishing children''s books and literature in general. Six years later Siciliano acquired the Berkeley Brasil publishing house and entered into the information technology publishing business.

In 1996, these two publishing houses became one, selling content through four brand names: Arx, fiction and non-fiction books; Futura, general business literature, technical and information technology publications; Caramelo, specialized in children''s literature; and Arxjovem, whose main publishing lines are fiction and non-fiction books for teenagers.

The following year, Siciliano launched its e-commerce web site, which can be accessed at .

In 1998 the North American fund Darby Overseas Investments, Ltd. acquired 35% of Siciliano share capital. In 2004 the company started to franchise its brand name. Today Siciliano has franchisees in the cities Caxias do Sul (Rio Grande do Sul State), Fortaleza (Ceara State), Mossoro (Rio Grande do Norte State), Jundiai (Sao Paulo State), Rio de Janeiro (Rio Janeiro State), Natal (Rio Grande do Norte State), Rio Claro (Sao Paulo State), Sao Carlos (Sao Paulo State) and Sao Vicente (Sao Paulo State).

More on the Brazilian Book Industry

According to CBL data, the Brazilian Book Chamber, the book industry is still very fragmented and its revenue reaches approximately R$ 3.0 billion annually (2006 data). The National Bookstore Association registers more than 2.6 thousand bookstores in Brazil.