US retail behemoth Wal-Mart has acquired a majority stake in Chile’s largest food retailer Distribución y Servicio (D&S) in a move which marks an important step in Wal-Mart’s international strategy and one which will further strengthen Chile’s position as a world-class supplier
Under the deal, Wal-Mart will acquire approximately 58.2 per cent of the issued and outstanding shares of D&S, including shares represented as American Depository Shares in the US, according to a company press release.
Felipe Ibáñez Scott and Nicolas Ibáñez Scott will collectively retain approximately 40.1 per cent of the shares of D&S, leaving approximately 1.7 per cent held by the public.
“Partnering with D&S, with its strong brands and its position as Chile’s largest food retailer, is an important step in implementing Wal-Mart’s international strategy,” Craig Herkert, Wal-Mart Executive vice-president and CEO of the Americas said in a statement. “We continue to focus on portfolio optimization, global leverage and winning in every market.”
With 2007 net revenues in excess of US$3.8bn, D&S has more than 180 stores, 10 shopping centers and 85 PRESTO financial services branches. Established in 1957, the company operates under a number of different formats including hypermarkets Hiper de LIDER, supermarkets Express de LIDER, Super Bodega Acuenta and Ekono convenience stores.
“This partnership will allow us to reach even higher levels of excellence in our operations and customer service,” explained Enrique Ostale, Chief Executive Officer of D&S. “By combining our local retailing knowledge with Wal-Mart’s global expertise, we will create additional growth opportunities for our company and for our associates. We will also be able to deliver to our customers a broader selection, better quality and lower prices. We are very pleased the tender offer was successful.”
The transaction will also bring additional investment to Chile, not only in upgraded and new stores, but in associate and supplier development, according to Mr Herkert. Wal-Mart already has a global procurement office in Santiago and currently exports Chilean products to its stores in the US and throughout the world.
“Chile is already a growing global source for seafood, fruits and vegetables,” Mr Herkert added. “Our investment will further strengthen Chile as a world-class supplier. Not only do we provide local suppliers additional global opportunities through Wal-Mart’s global network of stores, we also have a history of collaborating with suppliers to enhance their productivity, product innovation, quality, packaging and environmental friendliness.”
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