World’s No.1 retailer Wal-Mart acquires majority stake in Chilean supermarket chain D&S

Wal-Mart Stores Inc, the No. 1 global retailer, said its tender offer for leading Chilean supermarket chain Distribucion y Servicio (D&S) has been a success. In 2008, Chile's antitrust tribunal nixed a proposed takeover of D&S by regional retailer Falabella.

Wal-Mart launched its bid for all of the issued and outstanding shares in D&S, including American Depositary Shares, on 24 December. The tender offer, originally valued at $2.66 billion, closed on Thursday. Wal-Mart today said it secured a 58.2 per cent stake in D&S. Wal-Mart said that the payment for the tendered and accepted shares is to begin on 29 January.

Felipe and Nicolas Ibanez Scott, brothers who are controlling shareholders in D&S, will retain approximately 40.1 per cent of the shares of D&S, leaving approximately 1.7 per cent held by the public, Wal-Mart said.

"Partnering with D&S, with its strong brands and its position as Chile's largest food retailer, is an important step in implementing Wal-Mart's international strategy," said Craig Herkert, Wal-Mart CEO of the Americas, in a statement. The chain has more than 180 stores, 10 shopping centers and 85 PRESTO financial services branches. D&S reported net revenues were in excess of $ 3.8 billion in 2007.

Analysts say Chile-based retail rival Cencosud, which operates supermarkets, department stores and home-improvement stores, probably is most at risk with Wal-Mart's arrival in Chile. D&S dominates Chile's supermarket industry, with about a one-third market share, while Cencosud runs a close second. The two retailers control over half of Chile's supermarket sales.

The takeover may also spur further consolidation in the industry in Latin America, particularly in the southernmost countries of the continent, where players are battling for market share in a retail sector that is maturing. Cencosud and Wal-Mart, with stores in 14 countries, are already rivals in Argentina and Brazil.