Chile’s Cencosud continues its expansion in Brazil after acquiring a chain in São Paulo

RIO DE JANEIRO, BRAZIL – Cencosud announced that it would purchase 100% of the Brazilian chain, Giga Atacado, for almost US$100 million. The transaction will mean that the Chilean company will expand its presence in Brazil and begin operations in São Paulo City.

“By this acquisition, Cencosud, through this new subsidiary, will enter the São Paulo market with the Cash & Carry format, a state where Cencosud does not yet operate,” the company’s general manager, Matías Videla, told the Financial Market Commission.

The Brazilian firm was founded in 2009, and its controlling company is Afn Participações Ltda.

Videla added that “we are very excited to enter the largest market in Latin America in São Paulo, with a format that we know will synergize with the stores we currently operate in Brazil”.

According to the national firm, Giga Atacado operates in the state of São Paulo through ten stores and has a distribution center. It has more than 1,300 employees, and its annual gross sales exceed R$1.5 billion (US$295 million).

“With this transaction, Cencosud enters the largest market in Brazil and South America, directly with the format that grows the most in Brazil and is the most resilient to recessionary macroeconomic contexts,” the company said.

Cencosud Brazil general manager, Sebastián Los, said that “we firmly believe that Giga will empower us with the right format, in a state full of opportunities. It is the beginning of a new growth stage, which our great team at Cencosud Brazil will know how to drive.”

However, the transaction amount could vary depending on Giga’s existing working capital when the transaction becomes effective. Videla said that the purchase would become effective once certain conditions are met, like obtaining authorization from Brazil’s Administrative Council for Economic Defense.

The purchase of Giga Atacado responds to the company’s investment plan for this year, in which it said that it did not rule out continuing to expand its presence in Brazil.

Regarding the impact on the company’s profits, the firm linked to the Paulmann family “expects that this acquisition will have a favorable result on Cencosud’s consolidated results, which cannot be precisely quantified”.

Cencosud’s history in Brazil began with purchasing the retail chain GBarbosa at the end of 2007 and acquiring others such as Perini, Bretas, and Prezunic.

With information from La Tercera