Chile’s Cencosud to Buy 67% of Apollo’s Fresh Market for $676M

With the purchase of the stake, Cencosud will enter the U.S. market, where it currently has no operations

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Bloomberg — Chilean retail chain Cencosud has reached an agreement to buy 67% of The Fresh Market Holdings for $676 million, according to a filing sent to the local regulator.

With this buy-in, Cencosud will enter the U.S. market, where it currently has no operations, and the agreement offers Cencosud the possibility to reach 100% ownership of Fresh Market after a certain period of time.

The Fresh Market Holdings is currently owned by Apollo Global Management.

The deal still needs approval from U.S. regulators, and the acquisition is expected to have a favorable effect on the consolidated results of Cencosud, according to the filing.

Future U.S. operations will represent about 12% of Cencosud’s proforma revenue, CEO Matias Videla said at a press conference on Tuesday. That compares with 51% from Chile, 15% from Argentina, 9% from Brazil, and 7% each from Colombia and Peru.

Sixty-percent of the transaction will be paid with cash, and 40% with bank credit, Videla said. Fresh Market Holdings has an Ebitda margin of 10.2%, he added.

From the $676 million purchase, close to $260 million will be used to pay debt, according to the filing, while Cencosud will not change Fresh Market’s management team. Cencosud could acquire 100% of Fresh Market after three years once the current transaction materializes.