Cencosud pulls out of Disco takeover
talks with Dutch retailer Ahold over the acquisition of the
latter's Argentinian unit, Disco, after failing to reach an
agreement.
Ahold has said that it was no longer talking exclusively to the Chilean group, which has already bought the Santa Isabel chain in Chile from Ahold.
Cencosud said last month that it was in talks with Ahold over the acquisition of Disco, one of numerous operations being sold off by the Dutch group as it tries to recover from a devastating financial scandal and the worldwide economic downturn.
But with this exclusive period now over, the way is open for Ahold to talk to other interested parties about a possible takeover of the Disco business.
Disco, which operates 237 stores in Argentina, is thought to be worth around $200-350 million. The chain has a 19 per cent share of the Argentine market, well ahead of Cencosud with 6 per cent.
With such a significant share of the market - even one such as Argentina which has been plagued by monetary problems - there could be any number of potential bidders for Disco now that Cencosud is apparently out of the picture.
Ahold's business in Brazil is also up for sale, with Wal-Mart of the US and local player CBD (part owned by Casino of France) expected to slug it out, and the American group could also be a potential buyer for Disco as it looks to expand its geographical coverage and further strengthen its position as the world's top retailer.
Wal-Mart already has a small operation in Argentina, albeit nothing like the scale of its main Latin American unit in Mexico, and it could seek to gain a more significant foothold with Disco. Casino also has Argentinian units, and may be equally tempted by Disco, especially if it loses out to Wal-Mart in Brazil.
But the currency problems in Argentina and elsewhere in Latin America mean that even those companies such as Carrefour, Casino and Auchan which already have investments there may think twice about further expanding their operations, leaving the door open to local operators.
Here it is less clear as to who might be interested, however, with the biggest local operators in the region based in Mexico and with more than enough competition from Wal-Mart to keep them busy.
