Ahold confirms Wal-Mart takeover of Bompreco

Related tags Brazil São paulo Wal-mart

Dutch retail group Ahold has confirmed that its Brazilian unit
Bompreco has been bought by giant US retailer Wal-Mart, bringing to
an end several months of negotiations and clearing the way for the
sale of its other Brazilian unit, G Barbosa.

Ahold had initially put all its Brazilian businesses up for sale as one unit, but the competition authorities there ruled that two main retail operations could not be sold to the same bidder, further delaying the process.

Wal-Mart has been the leading contender to buy the business right from the start, as the US group has made no secret of its desire to expand further into Brazil and build on the success of its other main Latin American unit in Mexico. It also has a small retail business in Argentina.

Wal-Mart will now take over Bompreco's 118 units (hypermarkets, supermarkets and mini markets, all based in north eastern Brazil), taking its total number of stores there to 143. Wal-Mart said it paid around $300 million for the Bompreco business.

Bompreco is a good fit with Wal-Mart's existing Brazilian business, which it has run since 1995. The US group's stores are based in the south eastern states of Sao Paulo, Parana, Rio de Janeiro and Minais Gerais, and Bompreco will give it its first foothold in the northern part of the country. Wal-Mart's Brazilian sales were around 1.9 billion reais in 2003, while Bompreco's were around 2.9 billion reais.

In a related deal, Ahold said that it had also sold its Hipercard credit card business to the Brazilian banking group Unibanca for around $200 million. Hipercard is the credit card leader in Brazil's north east region and the third biggest brand in Brazil, and also runs the Bompreco store card scheme.

Unibanco, the third largest private-sector Brazilian financial group, focuses on retail and wholesale banking, and insurance and pensions and wealth management.

The divestment of Ahold's activities in Brazil is part of its strategy to focus on units with significant growth potential and to strengthen its financial position by reducing debts. Its only remaining business there is G Barbosa, a chain of around 32 stores, and this is now expected to be sold to local market leader CBD, in which French group Casino has a minority stake.

Ahold has already sold its business in Chile and Peru, but is still negotiating the sale of its Disco business in Argentina and a small unit in Paraguay. The Dutch group is part way through a major overhaul of its business, which was begun before the discovery of a €1 billion hole in the company's accounts following accounting fraud in the US, but significantly expanded as a result.

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