Cencosud Takes Over Easy Colombia

Chilean retail giant Cencosud has acquired the 30% stake it did not yet own in houseware retailer Easy Colombia from joint venture partner Casino Guichard. Cencosud does not disclose the price it paid for the stake. Barbara Angerstein, an equities analyst with Celfin Capital in Chile, estimates it was below $10m, as Easy only has one store, located in Bogota. She adds that Casino paid Cencosud $70m in the second quarter of 2007 for the use of the Easy brand, access to suppliers and business know-how. Cencosud likely paid cash for the stake. Angerstein says that as of December, Cencosud had about $200m in cash at hand. However, the company also has some $350m in short-term debt, she says, adding that it is likely Cencosud will want to pay it down by $100m or $150m and refinance the rest. Casino and Cencosud formed the joint venture in May 2007 and intended to invest $200m over 5 years to open 15 stores. Angerstein has a buy rating on Cencosud. Her target price for the company’s stock is CLP1,320. On April 2, Cencosud shares closed at CLP990, up 1.75% from the previous close.