Santiago, Dec. 16 - Chilean retailer Cencosud said on Sunday it agreed to acquire the supermarket and shopping center operator of Peru's top retailer, Grupo Wong, for a transaction including stock that it valued at $500 million.
The acquisition adds a fifth country to the giant Chilean retailer's roster of operations and is the latest step by the sector to expand throughout the region and consolidate a position as Latin America's top retail players.
In a statement, Santiago-based Cencosud said the Wong family, which owns 96.83 percent of Grupo Wong, would receive 49.75 million shares of the Chilean retailer under the deal, valued at 2,000 pesos per share.
Wong controls 62 percent of the retail market in the capital, Lima, and has attracted the attention of Chilean retailers eager to expand their presence in the region.
The announcement ends months of speculation that a Chilean retailer was interested in acquiring the Peruvian company, which has always said it was not for sale.
Peruvian media had speculated that Wong was being considered as a takeover target by U.S.-based Wal-Mart Stores Inc, the world's largest retailer.
The entry into the Peruvian market establishes a presence for Cencosud in a fifth country in South America. It is already in Chile, Brazil and Argentina and is about to enter Colombia.
"This is another sign of how aggressive Cencosud is in its expansion in the region, entering its fifth country now," said Lorena Pizarro, chief analyst at the Alfa brokerage in Santiago.
Chilean retailers are seeking to expand throughout the region and Latin America's biggest players in the sector have set their sights firmly on top markets.
Ripley Corp, Chile's third-largest retailer, announced a deal this month to create a new retail company with Mexico's upscale department store chain Palacio de Hierro.
The two are creating a company in which Palacio de Hierro will hold 52.5 percent and Ripley the rest as they open stores in Mexico that will also offer credit cards and some financial services. The planned investment is for $400 million over the next four years.
Ripley was an often-mentioned potential suitor for Wong as well.
Falabella, Chile's leading diversified retailer, has stores in Argentina, Peru and Colombia and is waiting for regulators to clear a merger with Chile's top supermarket chain D&S that will make it Latin America's second-largest retailer after Wal-Mart de Mexico (Walmex).
Last month Cencosud bought Brazil's fourth-largest retail chain GBarbosa and is currently working with the French group Casino to expand into Colombia during 2008.
Cencosud runs supermarkets, department stores, home-improvement stores and even banks.
Cencosud will receive 100 percent of the stock in GSW S.A., which operates the Grupo Wong supermarkets and shopping centers and which is 97 percent owned by the Wong family. The remaining 3 percent will be acquired from the FMO Investment Fund.
($1 = 498.20 pesos)