Ahold LatAm sell off continues with Peru

If the market is still waiting to see who emerges as potential buyers for Ahold's Spanish operations, put up for sale earlier this year as part of a major restructuring plan, the sale of the company's Latin American businesses is continuing apace, with the Peruvian unit the latest to be sold.

Ahold first announced plans to withdraw from a number of unprofitable businesses at the end of 2002, a year which saw it post its first quarterly losses for years, and with shareholder worries and crippling deflation in several countries there, the Latin American business was always high up the list of potential disposals.

The Chilean unit Santa Isabel was put up for sale in February, just before revelations of massive accounting fraud at Ahold's US Foodservice business, but with a shortfall of €1 billion to make up after restating its accounts, it was only a matter of time before other units were slated for disposal.

So it was in April that Ahold called for offers for its businesses in Argentina, Brazil, Peru and Paraguay, effectively ending its participation in the Latin American market - although its US businesses would at least ensure it retained a foothold in the New World.

Negotiations over the sale of the units have been lengthy - and not helped by the ongoing uncertainty at Ahold as it faced official probes and criminal investigations over the accounting fraud.

So it was only in August that the Chilean sale was concluded, with local player Cencosud paying $77 million for Santa Isabel. The same company also snapped up Ahold's Argentine unit Disco last month for an undisclosed sum.

Negotiations over the sale of the company's Brazilian business - one of the most coveted with 79 hypermarkets, 108 supermarkets and 69 hard discount stores there - are nearing a conclusion, and look likely to come down to a head-to-head battle between US giant Wal-Mart and CBD, the local market leader in which France's Casino group has a major stake.

The business in Paraguay is small - Ahold has just 10 stores there - and while the Peruvian Santa Isabel unit is also small (32 stores), it has been one of the best performing units in the region for the Dutch group, posting sales of €243 million in 2002, double-digit growth compared to the previous year.

This performance will certainly have impressed Grupo Interbank, one of the largest financial groups in Peru, which today became one of the new owners of the Peruvian business along with a group of investors led by the Nexus Group. Ahold has sold 100 per cent of its shareholding in the Peruvian business for an undisclosed sum.

Grupo Interbank has investments in banking, mutual funds and insurance, while Nexus Group is an active investor in Peru, with operations in entertainment and tourism.

Ahold said that the new owners would continue to operate the Santa Isabel business as a going concern.

As well as the Latin American businesses, Ahold has sold off a number of other underperforming or small-scale units, shedding the odd store in markets such as Poland or the entire business in other countries, such as the Tops unit in Indonesia.

Spain will be the next battleground, with the group's business there likely to appeal to a number of European players, not least Carrefour, Auchan and Casino which all have big operations in Spain already.

But it is Ahold's businesses in Eastern Europe that are among the most coveted by its main rivals, with Carrefour and Tesco in particular likely to be interested. But these units have been relatively successful, and have sufficient scale to continue to be so, making it likely that the Dutch group will hang on to them for as long as possible.