ZAANDAM, Netherlands -- Ahold here last week entered a joint venture to operate supermarkets and hypermarkets in Brazil.
tent to jointly develop further food retail operations in northeastern Brazil. Under the deal, Ahold would acquire 50% of the outstanding common shares of Bompreco's retail subsidiary. The transaction would be financed with available funds, Ahold said.
Bompreco, Brazil's fourth-largest food retailer with 1995 sales of $1.4 billion, operates 50 stores, including seven hypermarkets, 29 supermarkets, 11 minimarkets and three department stores, as well as four distribution centers. More than half of the stores are located in the Recife metropolitan area. The company also offers customer loyalty and credit card programs.
The hypermarkets, which account for 47% of Bompreco's total sales, average 71,000 square feet. The supermarkets, averaging 21,000 square feet, represent 44% of sales. Ahold said the minimarkets, roughly 11,000 square feet each, are slated to be remodeled into supermarkets. Plans also call for the department stores, averaging 32,000 square feet, to be converted into hypermarkets.
Once the joint venture company is established, the partners plan aggressive expansion in northern and northeastern Brazil. That will be done via optimization of existing operations, opening new hypermarkets and large-format supermarkets plus acquisitions of other supermarket chains, Ahold said.
"This opportunity to join forces with a highly respected and successful Brazilian company provides a flying start for Ahold in Latin America," according to Fritz Ahlqvist, a member of Ahold's corporate executive board. "The northeast of Brazil accounts for approximately 25% of the country's population of 160 million and shows considerable economic growth. The management of Bompreco is excellent, as are their strong consumer focus and their top stores."
According to Joao Carlos Paes Mendonca, Bompreco chairman and chief executive officer, "We see many more consumers in our trade areas wishing to do their shopping in supermarkets and hypermarkets. Through this partnership, we're better-positioned to offer the types of stores they want."
In Brazil, Ahold faces competition from two other global retail giants. Wal-Mart Stores, Bentonville, Ark., has unveiled plans to open four more supercenters in the Sao Paulo region, adding to its two supercenters and three Sam's Clubs already there. Paris-based Carrefour has 41 hypermarkets in Brazil, more than a dozen of which are in and around Sao Paulo. This fall, it announced plans to add 10 more hypermarkets by the end of this year.