Almacenes Exito, Colombia’s largest retailer, is pushing ahead with a $1.4 billion share offering, with the company expected to sell the full amount despite ongoing turbulence in the markets.
The company is moving forward with the sale, a massive size for the local bourse, thanks to an agreement with its largest shareholder, France’s Casino Guichard-Perrachon SA, which is set to buy more than half of the offering. Additionally, pension funds that already have a stake in the firm plan to purchase a large chunk of the new sale.
“It’s a large stock sale, but they already have commitments for 77% of the amount offered,” said Jairo Agudelo, an analyst with investment firm Celfin Capital. The public offering will allow the company to become Casino’s main instrument for its expansion in Latin America, Agudelo added.
Exito already has taken the first step, agreeing to buy Casino’s operations in Uruguay for $746 million. The purchase in Uruguay, in turn, will be paid by Casino buying the new Exito shares. “Casino is not netting any money because of this, it’s simply rearranging its structure,” Agudelo said. Casino has a 54.8% stake in Exito.
Exito launched the stock sale on Sept. 5 and is expected to wrap it up on Sept. 23. Company officials weren’t immediately available for comment.
Exito priced the COP2.5 trillion offering ($1.4 billion) at COP21,900 a share, offering investors an 8% discount from the average share price over the last month. On Friday, Exito’s shares traded at COP23,000.
The stock sale by Exito follows a series of offerings in the local market. The last one, by state-run oil firm Ecopetrol SA, received a lukewarm reception as it came slightly short of the $1.4 billion it was offering.
The retailer is moving to expand its operations overseas and also to open more stores in Colombia. Exito already controls 42% of Colombia’s formal retail market. With the purchase in Uruguay, it will have a 43% market share there, and Exito is also eyeing other acquisitions in the region.