MEDELLÍN, Colombia — Éxito bought 18 percent of Brazil’s Pau de Azucar and fully acquired Argentina’s Libertad from French parent Casino Group for $1.8 billion in a deal that will sharply boost its South American presence.
The complex transaction comes as Casino Group is restructuring its regional operations.
“Casino Group is changing its organization by regrouping all its operations in Latin America,” the firm said Thursday. “This new organization will be set up around its Colombian subsidiary Éxito and will enhance the group’s future growth prospects in Latin America.”
The deal will see Éxito operate Casino’s subsidiaries in Brazil, Colombia, Argentina and Uruguay, representing a market of 280 million people.
“It will be a leading group in the region, positioned…to seize regional consolidation opportunities,” with a 2,500-strong store network, Casino said.
The enlarged Éxito will have “comprehensive coverage of all customer segments, with specific banners and an expertise in a mix of formats [hypermarkets, supermarkets, convenience, cash & carry, discount and specialized distribution],” it added.
Éxito said the transaction will see it acquire an 18 percent stake in Pau and 50 percent of its voting shares. Pau de Azucar operates 2,100 supermarkets and hypermarkets while Libertad owns 27 stores.
“The company will become the leading retailer in South America, with earnings before interest, taxes, depreciation and amortization of $2.7 billion and sales exceeding $33 billion,” Éxito said.
Pao and Libertad have sales of $27.8 billion and $495 million, respectively. The deal will generate $160 million in synergies once it closes.
Éxito did not say how the transaction will impact its growing textiles and apparel division, forecast to increase 9 percent to 1 billion pesos, or $348 million at current exchange, in Colombia alone this year, up from 5 percent in 2014.
This is partly because of the recent purchase of compatriot supermarket chain Super-Inter. Operating profits at the EBIT level will rise 10 percent from 5 percent last year.
Éxito sells private label and multibranded clothing across 94 hypermarkets and other stores in Colombia, where it is the largest retailer. It also manufactures for third-party brands including American Eagle, Aéropostale and local lingerie brand Leonisa.
On Thursday, Éxito brand Arkitect launched a new capsule collection featuring Colombian designers Jorge Duque, Camilo Alvarez, Isabel Henao and Renata Lozano. The spring line will sell in 27 stores and is expected to generate sales of $1 million, textiles division director Jorge Jaller told WWD.
“We are very happy,” Jaller said, adding that the peso’s depreciation is boosting its third-party manufacturing and export business, mainly to France but also to Venezuela, Ecuador and the Caribbean.
This year, Éxito Colombia hopes to export 400,000 pieces to France’s Cdiscount, Monoprix, Gien and Go Sport, from its manufacturing facilities churning out 24 million garments a year.
Éxito’s other private labels include Bronzini, Wkd, Bluss, Cogi, People, Custer and Blues.