BOSTON — Wal-Mart Stores Inc. is gaining a foothold in Central America for the first time, buying a one-third stake in Central America's largest retailer, Central American Retail Holding Co.
Wal-Mart, the world's largest retailer, said the deal with CAR's owner, Dutch conglomerate Royal Ahold NV, calls for Wal-Mart to acquire a majority ownership by the end of 2006. Financial terms of the agreement were not disclosed.
"We believe our investment will add strength to the partnership by helping to keep prices low for consumers and will offer new opportunities to suppliers in the region for additional business development," said Wal-Mart International chief executive officer John Mentzer.
The $2 billion CAR operates 363 supermarkets, hypermarkets and other formats in Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica.
Customers in South America, Central America and Asia generally have been receptive to Wal-Mart's model of low-price, one-stop shopping, said Richard Hastings, senior retail analyst for Bernard Sands.
"Wal-Mart is eager to expand internationally where their growth rates are faster and there is less resistance to the issues that sometimes hold them back here: zoning, unions and some merchandising preferences," Hastings noted.
Wal-Mart has used partial stakes in companies as a way of gaining an entry to new markets. It entered Japan that way, taking a 6 percent share of Japanese retailer Seiyu. The company has boosted its stake to 42 percent and implemented proprietary inventory management technologies at the Japanese discounter. Hastings said it was "logical" to think Wal-Mart could follow a similar strategy with CAR.
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