Auchan is to plough €600 million (£414 million) into its Portuguese retail arm amid speculation that it could acquire hypermarkets from rival Carrefour.
The French food and general merchandise retailer is set to inject the cash over the next three years as part of a drive to expand its Pão de Açúcar supermarkets, Jumbo hypermarkets, filling stations and pharmacy operations.
Auchan announced the investment as fellow French retailer Carrefour, the world’s biggest retailer after Wal-Mart, said it wanted to generate €3 billion(£2 billion) by selling hypermarkets in Portugal, as well as all its operations in Switzerland and some assets in other countries.
Management Horizons chief executive George Wallace said the grocery market in Portugal is likely to consolidate to achieve economies of scale.
“Compared to other European markets, Portugal is quite small and there has been much speculation about Auchan taking over Carrefour hypermarkets,” Wallace said. “Instead of the different hypermarkets slogging away against each other in a relatively small market, they could consolidate and work together more effectively.”
The Portuguese grocery market was worth €20.1 billion (£13.9 billion) last year, according to IGD. Auchan entered Portugal more than a decade ago when it bought the Pão de Açúcar group.
The company now operates 387 hypermarkets in 12 countries, as well as 1,400 franchised or associated supermarkets in Italy, France and Spain.
More than 50 per cent of the group’s revenue comes from its global operations. Last year, pre-tax revenues increased 4.1 per cent to 35 billion (£24 billion).
Carrefour announced last month that it will sell a 20 per cent stake in its property unit next year. The division owns 280 superstores and 540 smaller supermarkets in Europe – 60 per cent of Carrefour’s real estate. Combined with proceeds from selling stores, the move will help Carrefour buy back €4.5 billion (£3.1 billion) worth of its stock.
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