The sale of Carrefour Argentina is entering a crucial phase, with the deadline for submitting binding offers set for today, December 15, as part of the French group’s exit process from the local market.
In reality, the process is part of a global review plan announced by Alexandre Bompard, Global CEO of Carrefour, aiming to divest assets and subsidiaries considered non-strategic to finance its investments in France, Spain and Brazil.
That is, in markets that it considers strategic and where it has no need Assign millionaires They need funds to strengthen their operations, as is the case with Argentina, which has no longer been an attractive country for multinational corporations for several years.
The choice of the buyer is crucial as it affects the reorganization of the premises, investment plans, etc Relationship with suppliers and brands and there is speculation that the purchase agreement could be signed before the end of the year.
It involves 700 branches of different formats as part of a process led by Deutsche Bank as a financial company with a mandate to sell a chain of 80 hypermarkets, 80 markets, 35 wholesalers and 450 express branches, in addition to its own financial company such as Financial Services Bank, an employee network of 17,000 employees, branches in 110 communities and a market position of 21.1%.
That’s why it’s certain that this day could define the future of the country’s largest supermarket chain Francisco de Narvaez as the main candidate.
Trust GDN
In fact, the GDN group is run by the businessman with 60% of the capital and by the French background L.CattertonIn the other 40%, there are those who already consider themselves “the chosen ones” to complete the deal and add these assets to their companies in this sector in which they are involved with the Changomás chain, which was created after the purchase of the local Walmart stores in 2020.
The entrepreneur has already sent his offer via email 1,000 million US dollars Late November last year to add the premises; the 19,000 employees and 21% of the market that its competitor currently has.
He would also have suggested introducing a strict ethics and compliance agreement to maintain the brand. Carrefour in the local market, thus separating the stores of this chain and those of Changomás into two different companies.
De Narváez traveled there at the end of last week Europe and there was speculation that he would travel to France to meet with the Carrefour board at the group’s headquarters in the Massy district, in the greater French capital, more precisely on Avenue 93.
Partnership to feel good
However, the other two competitors in this race such as Alfredo Coto and the North American fund Klaff Realty decided to join forces to fight until the last moment, with an offer that could exceed that of the owner of Changomás.
As far as he could tell iProfessionalthe proposal would be led by Klaff Real Estate and supported by Coto, with the aim of offering Carrefour France a more flexible and better contract than that of De Narvaez, which would not involve maintaining the use of the brand but, on the contrary, an orderly and clean exit from Argentina.
If successful, the initiative of both groups will be to distribute the assets Carrefour Argentinaso that the local businessman increases his presence in the supermarket business and the North American fund carries out real estate developments in the premises that are not part of a supposed asset integration.
One month extension
The original date was set for November 15th last year, but on that day there was only the offer of From Narvaezwhich announced that it was willing to pay $1,000 million and negotiate a trademark usage agreement with the French group in return for an additional annual fee and the signing of a detailed contract with important compliance obligations that must be fulfilled.
However, the other two competitors requested an extension, which was granted until December 15, a month in which supermarket chains turn their attention to the year-end holidays, since during this period they can achieve 40% of the entire year’s sales. From this expansion, they joined forces and managed to put together an alternative offer to that of From Narvaez.
The initial deadline for meeting this requirement was set by the Commission Deutsche Bank for November 18th at 5:00 p.m. in Argentina. which would be more practical from both an economic and contractual perspective.
Coto also fought hard to stay at Carrefour Argentina, to the point of assembling a technical group with UBS Bank as a financial advisor; the consulting firm Deloitte; the Bomchil law firm, which advises the largest French corporations in Argentina, the consulting firm S+R Gestion and even a French M&A boutique operating under the trade name EuroLatina Finance. All, led by German CotoAlfredo’s eldest son, who is now responsible for the chain’s expansion process and is preparing to consolidate the succession of his father, currently 83 years old.
local guide
The chain has more than 120 branches and 36 hypermarkets in the country, 81 supermarkets and eight mini markets, most of these stores are located in the greater Buenos Aires area. The company also operates three meat processing plants and a poultry plant from which it exports to the rest of the world. The Klaff Realty fund does not have a presence in Argentina since it currently controls the Tienda Inglesa chain in Uruguay, which gives it experience in the sector and the means to meet the economic claims of the French group of almost 2,000 million US dollars following the sale of its Argentine business.
The purchase in the neighboring country was completed $120 million And almost immediately, the fund launched an expansion plan that has resulted in it now operating around 100 branches, employing more than 4,000 people and billing about $750 million per year.
Furthermore, the brand English shop The company enjoys a high level of recognition among Argentinians vacationing in Uruguay, so much so that if Carrefour Argentina decides to remain as Carrefour Argentina, it would implement a transition plan of approximately one year to introduce this brand as a replacement for the French chain.
Farewell to Uruguay
The chain, in turn, directs From Narvaez The company operates 92 stores of its various formats in 21 provinces and in the federal capital, but its main presence is in the province of Buenos Aires, where it has 31 stores, including hyper and super formats, but also has a sizeable market in other provinces such as Mendoza (5 stores), Tucumán (5), Córdoba (6), Río Negro (4) and Salta (4). De Narváez would have already decided on the financial leverage to honor the payment of the $1,000 million. Part would be sustained by the funds it would obtain from the sale of all its assets in Uruguay.
In the neighboring country, negotiations are underway to sell Ta-Ta, a large retail chain that operates through a network of supermarkets, hypermarkets, discounters, specialty stores and its e-commerce platform. There is already a memorandum of understanding with the Paraguayan conglomerate Vierci, which is already present in several countries in the region, including Brazil, Uruguay, Panama, Bolivia, Chile, Peru and even in USA.
It would also separate from the pharmacy chain Saint Roch and the clothing company BAS, which operate independently but whose balance sheets are presented jointly with those of the Ta-Ta Group.
In the last few hours, Uruguayan media reported the existence of a group from that country that had also shown interest in taking over Uruguayan companies From Narvaez.
Important partners
When elected by the board of directors European conglomerateDe Narváez would later control a gondola giant that would capture around 29% of the market; It would employ 39,000 people and operate nearly 800 stores. Although the businessman is leading the process with GDN, he also has several important “partners” in this dispute such as the French investment fund L Catterton and IRSA, the largest real estate developer in Argentina chaired by Eduardo Elsztain.
The market is clear that this support “underlines the seriousness and financial support of the offer” and assures that the proposal submitted by GDN to Deutsche Bank cannot be matched by the other two groups interested in taking over. Carrefour Argentina.
Because De Narváez’s strategy is to keep Carrefour in the country if the offer is accepted and to negotiate with the parent company in Paris to operate the brand under a license or franchise program. This model would allow the new operator to benefit from Carrefour’s prominence and track record in the country and avoid a costly transition across its more than 700 stores.
However, this is not an easy task, as the agreement will be linked to a number of important conditions that the French group will impose From Narvaez and which are primarily associated with compliance with demanding quality and operational standards. They are aware that there is a possibility of reaching an agreement of this kind and also emphasize that the GDN group reaches the final stage with other advantages, such as a low probability of objections from the government due to a possible conflict over market shares.
That is, there would be no threat of a monopoly or dominant position forcing the company National Commission for the Defense of Competition (CNDC)to take measures to restrict the transaction, as the Changomás network has little overlap with Carrefour stores in Greater Buenos Aires (AMBA) and they do not compete significantly in the interior of the country.
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