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ZAANDAM, The Netherlands - Ahold has partially completed the sale of its 99 percent controlling interest in Disco S.A. to Chilean retailer Cencosud S.A., by transferring the ownership of approximately 85 percent of the outstanding Disco shares.
Cencosud plans to buy the remaining 15 percent of the Disco shares as soon as possible, according to the international retailer.
While the shares are subject to certain Uruguayan court orders processed and executed in Argentina, the deal makes Cencosud one of the biggest retailers in South America. It was first agreed upon last year but was delayed by Ahold's failed talks with other possible buyers and by legal disputes in the process of winning regulatory approval.
"This acquisition is very important for Cencosud, as it helps us consolidate as one of Argentina's principal retailers and shows with concrete actions the confidence we still have in the country," chairman Horst Paulmann said in a statement.
It was not clear when Cencosud would be able to buy the remaining shares, but executives said they had paid the full $315 million now to wrap up the deal.
Ahold and Cencosud completed the transaction based on a total value, excluding any liabilities, of $315 million for Ahold's entire interest in Disco, which is equal to the amount earlier announced on March 5, 2004.
The purchase amount for the transferred Disco shares has been put in escrow in case various contingencies were to occur prior to April 1, 2005. It is expected that Ahold will receive the escrowed funds in the first full week of April 2005, unless either party exercises its right under limited circumstances to reverse the transaction. The purchase amount for the remaining approximately 15 percent of the Disco shares that currently have not been transferred also has been put in escrow until such shares can be transferred to Cencosud.
Ahold has agreed to indemnify Cencosud for losses incurred if Ahold were to lose legal ownership to any of those shares. Pending the transfer of those shares, Ahold has agreed to exercise its voting rights with regard to those shares according to Cencosud's instructions and to pay to Cencosud any dividends received on such shares.
The divestment of Ahold's activities in Argentina is part of Ahold's strategy to optimize its portfolio and to strengthen its financial position after an accounting scandal erupted nearly two years ago.