Wal-Mart Expanding In Mexico Company To Acquire Stake In Leading Mexican Retailer

At a time many U.S. retailers are unloading their Mexican operations, Wal-Mart Stores Inc. will expand its presence there with the purchase of a majority stake in Cifra, Mexico’s biggest retailer.

The No. 1 U.S. retailer announced Tuesday that Cifra will first buy out Wal-Mart’s stake in the joint venture the retailers run together in Mexico, which includes 145 stores and restaurants.

Once that transaction is complete, Wal-Mart will then make a public tender offer to buy a 12 percent to 13 percent stake in Cifra. Wal-Mart said it expects to own a majority of the voting stock after the deals are concluded.

The deal comes just months after Sears, Roebuck & Co. and Kmart Corp. announced plans to scale back their presence in Mexico, which is still recovering from a recession in 1995.

“Now that Kmart and Sears have pulled out, Wal-Mart can be the principal game in town,” said Kurt Barnard, a retail consultant and president of Barnard’s Retail Marketing Report. “This gives Wal-Mart a chance to show its muscle and expand.”

Wal-Mart began its joint venture with Cifra six years ago to develop and expand retailing services in Mexico. It was the first venture outside the United States for Wal-Mart, which now operates 314 stores abroad.

“We are certain that the synergies and the combined efforts resulting from this merger will enhance our growth opportunities, increase our leadership in the market, and help us assure the lowest prices for our customers,” Henry Davis, Cifra’s chief executive officer, said in a statement.

Cifra, founded in Mexico in 1958, employs nearly 50,000 workers and had sales of $2.9 billion in 1996. Wal-Mart, based in Bentonville, Ark., had sales of $104 billion last year, operating more than 2,300 stores worldwide.

Wal-Mart shares rose 50 cents to close at $30.87-1/2 Tuesday on the New York Stock Exchange.