Latin Finance - March/April 2009 - 34

retail m&a Retailers Buy LatAm by Taina Rosa al-Mart’s Chile entrance via a $2.8 billion acquisition of 57% of local retailer D&S raised speculation that the world’s largest retailer would look to pick up more LatAm business. At the same time, regional retailers have been consolidating while multinational chains like Carrefour also buy in. “Growth will be concentrated in wellestablished markets, which deliver consistently strong returns, as well as on emerging markets with strong growth potential,” says Wal-Mart spokesman Kevin Gardner. He adds that that one of the company’s priorities is to “look for growth opportunities in markets like Chile.” The company’s international division will continue to have a faster growth rate than US operations for the foreseeable future, adds the spokesman. Wal-Mart’s financial information shows that for the 52-weeks ended January 30, international net sales jumped 6.6% to $97.8 million, while the US division’s net sales increased 6.2% to $253.9 million. For the 52-weeks ended February 1, 2008, international net sales increased 17.5% to $92.2 million, while the US division’s sales increased 5.8% to $239.0 million. The international division includes Brazil, Argentina, Mexico and Nicaragua, but also other countries such as the UK and Japan. Wal-Mart has said it plans to invest up to 1.8 billion reais to open up to 90 stores in Brazil and about $100 million in Argentina this year, where it wants to open 12-15 shops. It began operating in Brazil and Argentina in 1995. The company entered Mexico, where it is known as Walmex, in 1991 through a joint venture with Cifra, and in 1997 acquired a majority stake in the partner. W Wal-Mart’s recent Chile buy has raised expectations of more LatAm deals to come from the retail behemoth. Others will likely join the shopping spree. Hunting growth: Wal-Mart’s successful Chile purchase raises speculation about more to come In December alone, it opened 36 new stores in the country. Market rumors coming from bankers in Colombia indicate that Wal-Mart may be eyeing Colombia’s Supertiendas y Droguerías Olímpica, which hired Credit Suisse in September to evaluate strategic alternatives, including potential M&A. However, Olímpica says it is not in talks with Wal-Mart. there back in May, which could mean it is interested in an eventual Colombia presence. LatAm M&A specialists say this would make sense. “Colombia is a very attractive market for retailers because of the vast majority of retailers are mom and pop stores,” says Jairo Agudelo, retail industry analyst at Interbolsa. “There is a lot of room for growth.” Agudelo adds that that this year, Carrefour is expected to open 10 stores, Almacenes Exito will open eight and Olímpica three. These openings, he says, do not involve store acquisitions but organic growth. “Chile, in comparison, is a highly developed retail market, with 60% of the Cracking Colombia Although Wal-Mart is not saying anything about a possible foray into Colombia, data from that country’s Industry and Commerce Superintendent show the mega-retailer had registered its brands 34 LATINFINANCE March/April 2009

Latin Finance - March/April 2009

Table of Contents for the Digital Edition of Latin Finance - March/April 2009