Brazil Pao de Acucar mulls more acquisitions

Mon Jul 13, 2009 3:02pm EDT
By Alberto Alerigi Jr.
SAO PAULO, July 13 (Reuters) - CBD Grupo Pao de Acucar (PCAR5.SA), Brazil's biggest retailer, is eyeing further acquisitions in Brazil since the credit crisis has brought down valuations in Latin America's largest economy, the company's chief financial officer said on Monday.
Pao de Acucar, as the Sao Paulo-based retailer is known, is seeking to grow its "wholesale retailing" operations, or bulk-item retail sales, in the country's northeastern region among segments that present the company with growth opportunities, CFO Eneas Pestana told analysts and journalists in a conference call.
The company plans to spend 1.3 billion reais ($656 million) this year for expansion. CBD Pao de Acucar announced on Monday the purchase of the remaining 40 percent stake in wholesale retailer Assai for 175 million reais, giving it full control of the company.
"We knew that the global crisis would bring great opportunities and due to that we assembled a mergers and acquisitions team at the end of last year," Pestana said. "There are other opportunities, good deals for us."
Pao de Acucar, jointly controlled by France's Casino and the Diniz family, last month agreed to buy a 70 percent stake in Globex Utilidades (GLOB3.SA), which owns the Ponto Frio chain of stores, for 825 million reais. The transaction allowed Pao de Acucar to regain the top post as Brazil's leading retail group, which it lost to Carrefour (CARR.PA) in 2007.
Pestana declined to elaborate on future acquisition plans, adding that the company is eyeing opportunities in all possible segments of the retail market.
Pao de Acucar plans to double the number of Assai stores in the country within the next 18 months from about 30 currently. Pestana denied Assai will hinder Pao de Acucar's ability to generate cash and improve operational profits excluding taxes, debt, depreciation and amortization.
Preferred shares of Pao de Acucar rose 0.1 percent to 40.35 reais on late afternoon trading in Sao Paulo.
(Writing by Guillermo Parra-Bernal, editing by Matt Daily)