Mexican regulator approves sale of Suburbia to Liverpool

The Mexican Federal Economic Competition Commission (Cofece in Spanish) has unconditionally approved the sale of Suburbia by the Mexican subsidiary of Walmart to Liverpool group. The closing of the operation will take place in the coming days.

Commenting on the market regulator’s decision, Walmart said that 3.3 billion pesos of the total sales proceedings will be used to pay dividends to shareholders.

The transaction includes 100 percent of the shares of four legal entities, the intellectual property rights of the Suburbia brand and its own brands; The 119 stores, of which seven are owned, 78 in leases of buildings and / or land with third parties and 34 in lease of land and / or building with Walmart de Mexico, among other assets.

The Mexican subsidiary of Walmart completes the sale of Suburbia to the Port of Liverpool group

"The administration aims to understand the new business, how it operates, and find areas of opportunity and growth. Following this aim, the next 18 months will be a period of integration, keeping the format of Suburbia. In addition, the transaction will also make available to Liverpool a segment of the population that it does not cater for today,” according to an analysis of Intercam accessed by the Mexican edition of 'Expansion'.

It’s worth recalling this operation was made public in the summer of last year, when both companies announced that the transaction would close by 15.7 billion pesos (slightly less than 754 million euros).

"The fact that the transaction was made without any objection is already positive, the company expected, according to its studies, that perhaps nine of the 119 stores could be objected, and had to get rid of them. But acquiring the 119 points of sale, including the one that was ‘opened’, I think it is a good operation for both companies," said Valentín Mendoza, an analyst at Banorte Ixe.

"In the short term we will see opportunities for improvement in the retail operation. In the commercial offer there will be the incorporation of brands and important changes in the floor display," said Luis Willard, analyst of GBM Grupo Bursatil Mexicano in an interview with 'Expansión'.

In this regard, Willard said that the transaction will have a greater impact for Liverpool than for Walmart (its previous owner), since, from now, it will represent about 14 percent of total sales on average, compared With 3 - 3.5 percent the US supermarket giant had been adding to its overall group sales.

Image: Styleguide Spring 2017, Suburbia, Web