Cencosud Boosts Colombian Presence

Chile’s Cencosud has agreed to buy Carrefour’s Colombian business, it says, spending EUR2.0bn ($2.6bn) to gain about 18% of the country’s supermarket sector. The transaction is the latest example of a foreign player entering Colombia’s high-growth economy, and follows notable deals in the financial sector. Carrefour’s operations are second only to Grupo Exito, in a market with plenty of growth opportunity. “Retail has been a very attractive segment for foreign investment and is a sector that can continue to grow as the country grows,” Jorge Zuniga, equity analyst at Interbolsa, tells LatinFinance. Cencosud and others can still add a lot, particularly in less penetrated medium-sized cities, he adds. Smaller participants – Almacenes Olimpica La 14 and Alkosto are among the next largest – could also become targets for foreigners. The deal is seen coming at about 17x Ebitda. Cencosud will fund its purchase with a $2.5bn loan from JPMorgan. Credit Suisse advised the seller. The transaction is expected to close by the end of the year. Cencosud is Latin America’s third-largest retailer, operating supermarkets, malls, and department stores in Chile, Brazil, Peru, Argentina and Colombia, where it has had a smaller presence since 2007. Carrefour’s sale comes under a strategy of focusing on markets where it holds or aims to develop a leading position. The French company entered Colombia in 1998, and counts 72 hypermarkets, 16 convenience stores and 4 cash and carry stores, representing sales of EUR1.5bn in the 12 months to June 30.