Chile Buys Into Peru, Big Time

PERU - The major Peruvian supermarket chain, Wong, has been acquired by Chilean Cencosud during December. The deal should be completed by end of January.

All of Wong’s shares will be transferred to Cencosud for $500 million dollars, as will all real estate assets including its commercial centers and 23 supermarkets. A further 17 more stores are also likely to be included in the acquisition. Erasmo Wong will continue being the CEO of Wong Corporation he is also likely to become a director of Cencosud Chile.

Cencosud agreed to pay 49.75 million shares to Wong shareholders, valued at US$4.00 a share. The transaction makes, the Wong family the third or fourth largest shareholder of the Cencosud conglomerate with 2.5 percent of shares.

Concentrated, but competitive

In 2006, Peru’s total food retail market reached almost $5.7 billion, 85 per cent of which is concentrated in Lima. Supermarket chains reached $1.4 billion in food sales, growing 13 per cent on average in the last five years. The projection for this year is for 15 per cent growth.

The total consumer-oriented food imports into Peru reached $369 million. The United States was the third largest supplier ($39 million), with 11 per cent of the market share, but faced stiff competition from Chile, Colombia and Argentina. Between 2005 and 2006, US food exports to Peru increased 31 per cent. The retail sector accounts for approximately $207 million of food imports and multiple retailers constitute the main market for imported goods.

Currently, Wong Corporation has 48 stores - 44 in Lima and 4 in Trujillo. They also have plans to acquire a supermarket chain in Chiclayo (Supermarket El Centro) and in Arequipa in the near future. Cencosud will provide the financial support for the company to reach its goals of 15 new stores and two Commercial Centers.

Wong has 60 per cent of the supermarket market share in Peru. This year, Wong’s total sales are projected to reach 1 billion dollars. Wong Supermarkets have a strong presence among Peruvian costumers. In fact, 65 per cent of consumers who took part in and Annual Survey of Executives by Lima Chamber of Commerce during October/November 2007, said they preferred the retailer to other provisions outlets.

TheFishSite News Desk

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