Uruguay to block Tienda Inglesa from buying competitor

Uruguay to block Tienda Inglesa from buying competitor

M&A Economy & Policy Regulation Uruguay

Uruguay's antitrust agency is poised to block Tienda Inglesa, a supermarket chain controlled by US bank Goldman Sachs, from buying rival Disco, an official source told LatinFinance on Monday.

"The operation is not going to take place," the source at the agency said on the condition of not being named. The source added that a final decision would be made public by Tuesday.

Goldman Sachs, which acquired a majority stake in Tienda Inglesa in 2016, started talks last year to buy Disco from its majority shareholder, Colombia's Grupo Éxito. The sale, which also included Devoto and Géant stores, was part of a wider restructuring by France's Groupe Casino, which owns Éxito. In August last year, Casino said it would sell non-strategic assets for an estimated €2 billion euros ($2.21 billion) "to focus its development on buoyant segments, adapted to market changes," which it listed as e-commerce, premium and convenience.

Tienda Inglesa and Disco are two of the largest supermarket chains in Uruguay, and their potential merger raised concerns about decreased competition in the sector. Complaints came from Ta-Ta Supermercados, which is owned by Argentina's Grupo De Narváez, and the local trade association for wholesale food sellers. The opposition led Éxito to pull out of the negotiations, local newspaper El País reported on Monday.

Another setback was the spread of the coronavirus, which has slowed retail sales globally, raised costs for supermarket chains and made it harder to nail down financing for deals. At the same time, market volatility since the outbreak has caused the Uruguayan peso to fall 15% against the US dollar in the past month.

Goldman Sachs declined to comment on the deal.