Wal-Mart has bought 33 1/3% of supermarket operator Central American Retail Holding Company from Ahold.
CARHCO is Central America’s largest retailer, with 363 supermarkets and other stores in the following five countries: Guatemala (120), El Salvador (57), Honduras (32), Nicaragua (30) and Costa Rica (124). CARHCO has approximately 23,000 associates. Its sales during 2004 were approximately $2.0bn.
Wal-Mart acquired its interest in CARHCO from the Dutch retailer Royal Ahold NV. The purchase price was not disclosed. CARHCO was formed as a joint venture in 2001 with three equal partners: Ahold and two Central American groups: the Paiz family, the major shareholders of La Fragua, with headquarters in Guatemala, and Corporación de Supermercados Unidos (CSU), with headquarters in Costa Rica.
“We are delighted to have this opportunity to invest in the future of Central America,” said Wal-Mart president and CEO John Menzer, adding that the alliance had been under discussion for several years. “We are joining a strong partnership that is delivering outstanding service to customers throughout the region. We believe our investment will add strength to the partnership by helping to keep prices low for consumers and will offer new opportunities to suppliers in the region for additional business development.” As part of the agreement, Wal-Mart will acquire additional interests over time in CARHCO, including interests toward achieving majority ownership in the company.
The new partnership demonstrates confidence in the region’s economic potential, Menzer said, adding that significant investments are planned in the years ahead to open new stores and serve customers better with improved services, high quality and innovative products and lower prices.
In addition, specialized training programs are planned for CARHCO associates and for suppliers to assist in career and business development. A consolidated network of Central American supermarkets will have vast potential for product commercialization and regional economic development.
The investment in CARHCO is Wal-Mart’s first in Central America, although the region is a major source of apparel for the company. Wal-Mart directly imports more than $350m in goods from Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica. In addition, Wal-Mart purchases goods from many suppliers with farms and factories in Central America.
“This alliance is not only an important recognition to Central American companies like La Fragua, CSU and CCA; above all, it represents a very significant achievement in the attraction of foreign investment to the region, which will allow us to improve our services and generate more jobs,” said Rodrigo Uribe, president of CARHCO. “Undoubtedly, this alliance will allow us to reach levels of excellence in operations and customer service of more developed markets for the benefit of the Central American consumers.”
“Our retailing expertise acquired by the years of operations, the common roots stemming from small family businesses based on similar values and principles, all come together today to strengthen each other by sharing skills and knowledge,” said Fernando Paiz, vice-president of CARHCO. “With Wal-Mart we will create growth opportunities for associates and suppliers. Customers will be pleased to see better assortment at the best prices.”