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Chile Cencosud May Buy Its Argentina Supermarket Unit from Investment Funds

7 October 2010

(Dow Jones) October 7, 2010 – Chilean retail holding giant Cencosud SA may take full ownership of its Argentine supermarket business after a group of investment funds decided to sell their 38.6% stake in its Jumbo Retail Argentina SA subsidiary.

The subsidiary–which controls the Jumbo hypermarkets and Disco and Super Vea supermarkets in Argentina–is forecast to represent nearly 23% of Cencosud’s total sales this year, according to local investment bank Banchile Inversiones.

For the first half of the year, Cencosud’s Argentine supermarket business posted sales of 664.10 billion Chilean pesos ($1.38 billion), a 2% increase year-on-year.

Cencosud has the option of paying for the stake with cash or via a share swap and has until the end of March to complete the transaction if it decides to do so, the company said, adding that it still hasn’t calculated a price tag for the stake.

In recent trading Cencosud’s shares were losing 0.2% to CLP3,165.00, while the blue-chip Ipsa index was falling 0.7%.

Cencosud is pursuing an aggressive $800 million investment plan in the five South American nations it operates in as part of its 2010 growth plan. In Chile, Cencosud operates the Jumbo and Santa Isabel supermarket chains as well as the Easy home-improvement stores and the Paris department-store chain. Cencosud also operates in Brazil, Colombia and Peru.

By Anthony Esposito

According to La Tercera, investment firms exercising their option to sell shares of the subsidiary of Cencosud, include Capital International Global Emerging Markets Funds LP; Capital International Private Equity fund IV LP; Palermo Argentrina Holdings I, SL; Palermo Argentrina Holdings II, SL; SCF Chile Holdings B, LLC; BSSF Chile Holdings B, LLC; Pine Bridge Latin Amerca Paralell Partners, CV; SCF Chile SA; BSSF Chile SA; BSSFP Chile SA and International Finance Corporation.

Click here to read the article in Spanish from La Tercera.