Bloomberg News

Colombia’s Exito Plunges on Offering, Uruguay Purchase Plan

June 30, 2011

(Updates with closing price in second paragraph and adds Brazil developments in final paragraph.)

June 30 (Bloomberg) -- Almacenes Exito SA, Colombia’s biggest publicly traded retailer, fell the most since 2008 after saying it plans to raise as much as $1.4 billion by selling new shares and may purchase a stake in Uruguayan supermarkets from majority shareholder Casino Guichard-Perrachon SA.

Medellin-based Exito fell 5.8 percent to 24,500 pesos at 4 p.m. New York time, the biggest decline since October 2008.

“Investors with Exito in their portfolio are betting a share issuance would come at a discount,” Angelica Dominguez, analyst at brokerage Bolsa y Renta, said in a phone interview from Medellin. “They’re saying ‘I’ll sell my shares now and buy back later at a discount.’ ”

The sale would come after two other publicly traded Colombian companies sold new shares at a discount this year. Grupo Aval Acciones y Valores, Colombia’s biggest financial holding company, issued $1.1 billion of shares in April and Grupo Nutresa offered $295 million this month, both at discounts of more than 10 percent.

Exito would likely follow the trend to attract investors, especially if it seeks to sell the full $1.4 billion in Bogota, Dominguez said. The company did not say whether it plans to issue the shares in Colombia or abroad.

The retailer disclosed the share sale plan in a filing with Colombia’s securities regulator yesterday, in which it also said it may buy a controlling stake in Disco and Devoto supermarkets through the purchase of holding company Spice Investment Mercosur.

Uruguay Supermarkets

The purchase would include 53 supermarkets in Uruguay with consolidated sales expected to reach $770 million this year, Casino, of Saint-Etienne, France, said in a statement today.

Casino, which said it holds a 54.8 percent stake in Exito, called the acquisition a “major step towards the internationalization of Exito” that will allow for synergies.

While the market may welcome Exito’s plans to expand abroad, investors may initially see the move as a seemingly “costly” purchase in a market that is small by Colombian standards, with a population less than a tenth of Colombia’s, said Jairo Agudelo, an analyst at Celfin Capital.

“We were always concerned that Exito only did business in Colombia,” said Agudelo, “What we never expected was that it would seek growth in Uruguay.”

Exito shareholders are to vote on the share issuance and transaction at a July 6 meeting. Barclays Bank PLC and JPMorgan advised Exito on the merger.

Casino Control

Casino, France’s second-biggest grocer with a quarter of its sales in Latin America, said it will maintain control of Exito by buying enough shares in the capital increase to maintain a majority stake. The transaction would boost Exito’s earnings per share from the first year and not impact Casino’s, the company said.

The Exito share sale and acquisition are not related to developments in Brazil, the company said. Casino stepped up a battle with French rival Carrefour SA for control of its Brazilian venture, Cia. Brasileira de Distribuicao Grupo Pao de Acucar, by buying more shares in the business.

--Editors: Richard Richtmyer, Marie-France Han

To contact the reporter on this story: Blake Schmidt in Bogota at

To contact the editor responsible for this story: David Papadopoulos at

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