Mexico City, Dec 6 - Retailer Soriana said on Thursday it was buying more than 200 stores from a smaller Mexican rival for $1.35 billion, nearly doubling its supermarkets and challenging market leader Wal-Mart.
Soriana agreed to buy 199 stores in Mexico and seven outlets in Los Angeles from Gigante, tapping the U.S. market for the first time.
With the acquisitions, Soriana, the No. 2 Mexican supermarket chain, will approach the scale of market leader Wal-Mart de Mexico (Walmex) and will gain more negotiating power with suppliers.
Soriana shares ended among the top gainers on the Mexican bourse, rising 6.12 percent to 33.65 pesos.
"This is a really good acquisition for Soriana, very strategic, and it boosts its presence in Mexico City," said analyst Marisol Huerta with Actinver brokerage. "It strengthens it to face up to the competition from Walmex."
Gigante shares were halted on the Mexican stock exchange for much of Thursday after soaring 14 percent. The suspension was lifted after the session ended.
Gigante said most of the 25,000 employees at the Mexican supermarkets it is selling Soriana will keep their jobs as part of the deal.
Gigante has a total of 285 supermarkets, as well as joint ventures with RadioShack Corp and Office Depot Inc, and restaurant operations.
Gigante will keep 79 "Super Precio" supermarkets after the sale is cleared by competition authorities. Gigante spokesman Sergio Montero told Reuters the company will also consider selling these stores.
"(Super Precio) is a format that Mexican and foreign (investors) are interested in because of its development potential in the country," Montero said.
About one-quarter of the stores Soriana was taking over were in the lucrative Mexico City area, a Walmex stronghold.
With the Gigante stores, Soriana would operate 449 supermarkets in Mexico -- compared with Walmex's 583 -- and would boost its installed sales floor capacity more than 47 percent.
Including restaurants and clothing stores, Walmex has 994 outlets across the country. The company is one of the most profitable operations of retail giant Wal-Mart Stores Inc outside the United States.
Soriana beat Chilean retailer Cencosud SA in the race to buy the Gigante stores.
It will take up to five months to convert the Gigante stores to Soriana formats, according to Rodrigo Benet, from Soriana's investor relations department.