Ahold, the troubled Dutch retailer, is to sell its Argentinian unit Disco to Cencosud, the company which recently bought Ahold's Chilean arm, Santa Isabel.
The sale of the 237-strong Disco chain in Argentina is part of Ahold's ongoing programme of disposals aimed at restoring profitability after a series of accounting scandals, including one at Disco itself.
Ahold said it was close to completing its negotiations with Cencosud and that it expected the transaction to be agreed by the end of the year. The deal, which is subject to approval by the local competition regulators, should be completed by the second quarter of 2004.
Cencosud has interests in real estate, do-it-yourself (DIY) stores and hypermarkets in Chile and Argentina. The company operates 12 hypermarkets and 23 DIY stores in Argentina, and in July added Santa Isabel's 77 outlets to its Jumbo unit in Chile which operates seven hypermarkets and 16 DIY stores.
Ahold is selling off a number of its underperforming businesses as it refocuses on those subsidiaries which have leading market positions. Also up for sale are its Bompreco and G Barbosa operations in Brazil - where Wal-Mart of the US and local player CBD, part owned by France's Casino, are the leading bidders - and its Santa Isabel units in Paraguay and Peru.
Ahold is likely to be glad to see the back of the Disco business for a number of reasons, not least because the company was one of several units implicated in the accounting scandal which pushed the Dutch group €1 billion into the red in 2002.
In February this year the company was forced to carry out an investigation of the "legality of certain transactions" at Disco, and while it discovered that these had had no material impact on the financial results, it was nonetheless a revelation which the company would have preferred to avoid.
Even before that, Disco was something of an albatross for Ahold. In August 2002 the Dutch group was required to buy out the joint owner of Disco, Velox Retail Holdings, after the latter defaulted on a number of loans, leading to a charge of €350 million.