Wal-Mart Efforts to Buy Carrefour Assets Said to Slow

Wal-Mart Stores Inc. (WMT)’s efforts to acquire Latin American assets from Carrefour SA (CA) are slowing as the French retailer focuses on turning around its European business, said people familiar with the matter.

Wal-Mart has pressed Carrefour to sell stores in Colombia and also Brazil, said the people, who declined to be identified as the negotiations were private. Carrefour’s Colombian unit generated 1.69 billion euros ($2.11 billion) in sales last year.

Wal-Mart is targeting stores overseas as revenue abroad climbs at 10 times the pace of U.S. sales. Doug McMillon, head of Wal-Mart’s international business, said last month the retailer is open to purchases in Japan and Latin America, and signaled that Colombia could be a possible site of expansion.

“Wal-Mart is realizing that the best strategy is buying something” rather than building something new, Bryan Gildenberg, an analyst with Kantar Retail, said in a telephone interview yesterday. “Colombia is a growing market and Wal-Mart isn’t there.”

Wal-Mart and Carrefour have held on-and-off negotiations for more than two years, with Wal-Mart initiating many of the talks, said one of the people. After some conversations this year, Carrefour has slowed the pace of talks as it deals with deteriorating conditions in Europe, according to this person.

While Wal-Mart remains interested in the operations, no deal is imminent, said two of these people. A spokesman for Bentonville, Arkansas-based Wal-Mart declined to comment, as did a spokeswoman for Boulogne-Billancourt, France-based Carrefour.

Wal-Mart rose less than 1 percent to $67.72 at the close in New York yesterday.

International Performance

Wal-Mart’s international sales climbed 15 percent in the year ended Jan. 31 to $125.9 billion, compared with a 1.5 percent increase for the U.S. operations.

Carrefour is in the midst of cost cuts to improve its performance in France, its largest market. Hypermarket same- store sales there sank 3.1 percent last quarter, excluding gasoline and currency moves. Shoppers are abandoning those types of stores as they seek out more convenient options, like smaller local shops and online retailers.

Carrefour’s Brazilian business may have a value of 5 billion euros to 7 billion euros, according to estimates from Caroline Gulliver, an analyst at Execution Noble in London.

Carrefour’s Colombia division is second in retail market share in the country, behind French rival Casino Guichard- Perrachon SA, according to Kantar. If Wal-Mart acquired the business, it may take a few years to integrate it and take advantage of growth in the market, said Mark Baum, managing partner of Marcat Group LLC, a consulting company in Washington, D.C.

“It follows Wal-Mart’s Latin American strategy,” Baum said in a phone interview. “If they are investing for the long haul it could work, but there won’t be an immediate return.”

To contact the reporters on this story: David Welch in Detroit at dwelch12@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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