Soriana challenges Wal-Mart

Mexico's second largest grocery retailer Organización Soriana will buy more than 200 stores from smaller Mexican rival Grupo Gigante for US$1.35 billion. This move boosts Soriana's floor capacity by 47% making it a clear number two and closes the gap on Walmex (Wal-Mart de Mexico), which currently operates around 583 stores. Gigante will continue to own the property which it will rent to Soriana.

The deal almost doubles the size of Soriana's store network and includes 199 stores in Mexico and seven in Los Angeles, United States. The stores that Soriana will acquire in Mexico are evenly split between hypermarkets and supermarkets.

Gigante's discount stores, which operate under the Super Precio banner, were not included in the transaction. Gigante is also considering selling these stores as it looks to focus on its real estate operations. Soriana does not currently operate any discount stores. However Mexico's large low income population makes it an ideal market for the no-frills discount format.

With Walmex finding its own discount stores to be one of its most successful formats it may well be eyeing Gigante's unsold discount stores for itself. Mexico's Competition Commission would be likely to have reservations about Walmex making such a large acquisition.

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Soriana [Spanish]