Latam retailers to consolidate buys in 2008

By Antonio de la Jara

SANTIAGO (Reuters) - Latin American retailers, who have yet to feel the effects of a global credit crunch, will use 2008 to consolidate investments made last year, many of them mergers and acquisitions.

Mexico's biggest retailer, Wal-Mart de Mexico (Walmex) WALMEXL.MX, will focus on organic growth while other regional players like Chile's Cencosud CEN.SN and Mexico's Soriana (SORIANAB.MX: Quote, Profile, Research, Stock Buzz) will focus on purchases made last year.

"Our business plans are based exclusively on organic (growth)," Walmex Chief Executive Eduardo Solorzano told the Reuters Latin American Investment Summit.

"We have planned through 2012, and none of our scenarios involve the possibility of an acquisition," he added. "However, if an opportunity crops up that makes economic sense for us, we'll explore it."

Soriana, Mexico's second-biggest retailer, bought 205 stores from its rival Gigante (GIGANTE.MX: Quote, Profile, Research, Stock Buzz) last year for $1.35 billion, 80 percent of which was financed through credit with banks Inbursa, Banamex and JP Morgan.

"At Soriana, we are studying the possibility of going to markets outside (Mexico)," said Aurelio Adan, Soriana's finance director. "It's not something we are thinking of doing now. Our focus for now is on Gigante."

Latin American retailers have had no trouble finding financing so far, despite turbulence in international markets.

Chile's Cencosud for example is planning a bond placement worth up to $450 million around the middle of this year.

Government officials and retailer executives alike say regional consumption has not been affected by global turbulence stemming from the high-risk mortgage market in the United States, which has slowed spending in the world's biggest economy.

Ripley Corp RIP.SN, Chile's No. 3 retailer, tied up with Mexico's Palacio de Hierro (GPH1.MX: Quote, Profile, Research, Stock Buzz) to form a new company in the Mexican market in which they plan to invest around $400 million over four years.

Chile's Cencosud moved into Peru's market in December through the acquisition of Grupo Wong, the fellow Andean country's biggest supermarket chain.

Cencosud, which also has units in Argentina and Brazil and is entering the Colombian market this year, also bought Brazilian supermarket chain GBarbosa for around $380 million.

"We are seeking to ... integrate our existing operations, look for synergies," said Laurence Golborne, Cencosud's chief executive.

"There is a lower level of penetration (in the supermarket business) in various countries like Brazil and Peru compared to Argentina and Chile," he added. "This sector needs to be formalized even more in some countries, there is huge scope for growth."

(For summit blog: summitnotebook.reuters.com/)

(With reporting by Gabriela Lopez in Monterrey and Rodrigo Martinez in Santiago; Writing by Simon Gardner; Editing by Jeffrey Benkoe)