France’s Casino Guichard-Perrachon Colombian retailing branch, Exito announced the signing of a share purchase agreement for the acquisition of Casino' majority stakes in Uruguay’s main supermarket chain Disco and Devoto in an operation involving 746 million US dollars.
Exito also announced its intention to launch a share offering in Colombia of up to 1.4 billion US dollars. The acquisition of Casino' majority stakes in its Uruguayan subsidiaries Disco and Devoto will be a major step towards the internationalization of Colombia’s Exito.
With consolidated sales of 770 million US dollars expected in 2011, Disco and Devoto operate 53 stores in Uruguay, including 1 Géant hypermarket, 28 Disco and 24 Devoto supermarkets for a total sales area of 73,900 sqm. The two banners are leaders in the modern food distribution market in Uruguay with a market share twice larger than the next competitor.
With this acquisition, Exito will become a regional player enjoying strong leadership positions in two of the most stable and promising markets in South America.
The combination of Exito with Disco and Devoto will strengthen the integration of two companies operating in countries with strong linguistic and cultural similarities. It will allow the generation of synergies, which have not been possible so long as the companies were operated separately.
In particular, the transaction will enable Disco and Devoto to benefit from Exito's expertise in the implementation of new distribution formats as well as in the development of non-food sales.
In order to finance its expansion plan, including the acquisition of Casino' stake in Disco and Devoto, Exito intends to issue new shares in Colombia for a total consideration of up to 1.4 billion US dollars. Casino, which holds 54.8% of Exito, intends to subscribe to the capital increase pro rata to its current ownership, therefore maintaining control over Exito.
The share issuance will strengthen Exito's already solid financial structure whilst providing the company with additional financial resources to accelerate its expansion in the Colombian market and other Hispanic Latin American countries where Exito's management has already identified a number of development opportunities.
It will also enable Casino to pursue the reduction of its indebtedness.
Casino is seeking to integrate its assets in South America as the company faces a battle for control of its Pao de Acucar unit in Brazil. Casino said on Wednesday it lifted its stake in Brazil's biggest retailer by 6.2% to 43.1% after the company proposed a merger with rival Carrefour SA, a move that Casino said it regards as hostile.