$676 million deal between Cencosud and The Fresh Market (TFM)

Recently, it was confirmed that Cencosud-a Chilean retail group has bought 67% stakes of The Fresh Market supermarket chain in a $676 million deal. Although, its stakes fell by 4% on dilution and valuation concerns.

Cencosud confirmed that the company has reached an agreement but the U.S. grocery chain that operates 160 stores and the affiliates of Apollo Global Management is controlling the funds.

Predictions by Analyst

The Itau BBA analyst has noted that this purchase might dilute Cencosud shareholders. The move from This deal is being questioned by several analysts. BTG Pactual’s research note read, that Cencosud had paid “a reasonable price” for the TFM stake, but questioned the logic behind throwing cash at a U.S expansion, warning Cencosud’s appeal as “a Latam (pure-play) retailer” could be hampered.

The Fresh Market’s profits

In 2021, the Fresh Market reported $1.93 billion and an adjusted EBITDA of $196 million, which is a premium specialty supermarket—competing with Whole Foods across 22 states, that has a stronger foothold in Florida.

These transactions are subjective to the fulfillment of specific conditions that include authorization by U.S. authorities. Cencosud is planning to eventually take over The Farm Market.

The filing by the company read, “After a certain period of time, Cencosud Internacional can reach a 100% stake,’ depending on ‘TFM’s cash, debt, working capital, and certain other variables.” This deal also entails Cencosud’s $100 million acquisition of Brazilian supermarket chain GIGA last week.

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