A New Chilean Multinational Retailer Arises: Falabella and D&S Agree on Merger and Strengthen International Presence
17 Maio 2007 - 8:13PM
PR Newswire (US)
- The two companies, controlled by the Solari, Cuneo and Del Rio
families, and the Ibanez family respectively, will add up to a
market cap of US$15 billion SANTIAGO, Chile, May 17
/PRNewswire-FirstCall/ -- The controllers of Falabella and D&S
today approved the merger of both companies and their respective
business areas -- department stores, supermarkets, home
improvement, financial retail services and shopping centers -- thus
creating a new multinational retail company that will pursue
stronger growth in international markets and will leverage
synergies at the local market. By means of a Material Event
communication filed with the Superintendency of Securities and
Insurance (SVS), the boards of both companies reported on the
agreement that will involve the merger of all the businesses
currently developed by Falabella and D&S, both in Chile and
abroad. As a result of the transaction, the shareholders of both
companies will become shareholders of the new business
conglomerate. According to this pledge, a new Falabella-D&S
holding will arise, the operator of Falabella, the most important
department store chain in South America, with presence in Chile,
Peru, Argentina and Colombia, and the main food retailer in Chile,
Lider. Additionally, this new company will incorporate the home
improvement, Saitec real estate, CMR, Presto, Falabella bank, San
Francisco and Tottus business units. Each business unit will
continue operating with no major changes. Falabella is controlled
by the Cuneo, Solari and Del Rio families, and Distribucion y
Servicio D&S by the Ibanez family. This transaction does not
involve any stock purchase or divestment, but rather a merger of
companies combining the equity of both companies. There is no
public offering (OPA) since all shareholders of each company will
participate under the same conditions and will benefit from the
integration. Stake in the new conglomerate Falabella-D&S will
be 77% for current Falabella shareholders and 23% for D&S's
shareholders. These percentages result from the exchange ratio
agreed upon by the controllers of both companies and reflect the
relative value allocated by each party to the total equity of both
companies. The two companies together will add up to a market
capitalization of over US$15 billion. Alfredo Moreno, director of
Falabella, stated, "Big countries have big companies and the only
way to compete with them in international markets is by means of
highly-efficient companies with bigger relative size.
Internationalization of businesses represents a contribution to the
domestic economy, and ultimately, to the country." According to
D&S's Vice-president, Hans Eben, "Joining forces will result in
benefits for all employees of both companies, since they will have
access to greater career development, broader know-how and,
therefore, greater stability for their jobs. This creates a
virtuous cycle that increases employment and improves productivity
and competitiveness, which is transferred into lower prices to the
benefit of all consumers and presents greater opportunities for
small and middle-sized companies (Pymes)". Both company directors,
the main actors in building the agreement along with Juan Cuneo,
highlighted the positive impact of this new retail conglomerate on
suppliers, as they will enjoy the benefits of growth. This merger
will provide suppliers with easier access to international markets,
improvement and greater efficiencies in the distribution network,
with a reduction in logistic costs. Moreno pointed out that the
competition will not be affected since there is practically no
overlap of the addressable markets. At the same time, he remarked
that, to date, there is only an agreement for merger, as the
transaction itself will materialize when the shareholders' meetings
of both companies approve such agreement with two-thirds of the
total votes. The process will involve a presentation before the
Tribunal de Defensa de la Libre Competencia (TDLC), or antitrust
commission, and the registration of the merged company with the SEC
in the United Status and the CNMV in Spain. Falabella and D&S
will continue operating independently, continuing their projects
and investment programs, as well as trading separately on the stock
market until the merger becomes effective. JPMorgan acted as
financial consultant in this transaction. For further information
please contact: Alejandro Droste, CFO: Phone: (56 2) 484 7757
Loreto Bradford, IRO: Phone: (56 2) 484 7757 DATASOURCE:
Distribucion y Servicio D&S S.A. CONTACT: Alejandro Droste,
CFO, +011-562-484-7757, , or Loreto Bradford, IRO,
+011-562-484-7757, , both of Distribucion y Servicio D&S Web
site: http://www.dys.cl/
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