Falabella and Soriana to Spend $600 Million in Mexico Dealby
The two companies will open Sodimac home-improvement stores
Falabella will also offer its CMR credit card through the JV
SACI Falabella, Latin America’s most valuable retailer after Wal-Mart de Mexico SAB, agreed to open home-improvement stores in Mexico in a joint venture with Organizacion Soriana SAB. Shares in Soriana rallied.
The two companies will invest $600 million to open 20 Sodimac stores over five years, according to a filing Friday on the website of Chile’s securities regulator. Santiago-based Falabella will offer its CMR credit card through the venture with Monterrey-based Soriana, Mexico’s second-largest grocer. They expect to sign definitive contracts within three months.
“Our entry into Mexico is an important milestone in our expansion in the region,” Falabella Chairman Carlo Solari said.
Mexico becomes Falabella’s seventh market in Latin America, where the company also operates department stores, supermarkets and malls. It has been using its Sodimac brand to spearhead its most recent expansion and profit from a growing middle class in the region.
Soriana rose as much as 6.1 percent in Mexico City, extending gains after the announcement, which was made after close of regular trading in Santiago. Soriana has 682 stores throughout Mexico with 3.2 million square meters of sales space, according to its website. The company’s shares have traded on the nation’s stock market since 1987.
In 2013, Falabella acquired half of Brazilian home-improvement store Construdecor and now operates 58 stores in that country. It opened its first Sodimac store in Uruguay and bought Peruvian home-improvement chain Maestro in 2014.
Soriana announced an agreement to buy most of rival Controladora Comercial Mexicana SAB’s stores in January last year. That transaction included the transfer of 160 stores, real-estate assets and rights to use some brands and promotional campaigns, the companies said in a joint statement at the time.