News to Investors
After the transaction with Brazil and Argentina, Grupo Éxito begins to realize the process of obtaining synergies valued at USD160 million
• Accenture, world-class consulting firm, was appointed to accompany the Éxito and GPA teams in the process of implementation of synergies.
• Senior executives both from Brazil and Colombia are part of the Synergy Committee.
• The first major synergies will be material in approximately 12 months.
• Quick win projects will materialize in the coming months.
"Grupo Éxito has grown through acquisitions (Cadenalco, Carulla-Vivero, Cafam and Super Inter) and Disco in Uruguay, in all of them achieving synergies and generating market value to customers and shareholders," said Carlos Mario Giraldo Moreno, Grupo Éxito CEO. Synergistic processes are already internalized in the organization and its teams which have been structured on positive past experiences.
International Advisory and Synergies Committee starts operations
The Company has already begun working on this purpose. The first step to achieve this is by hiring a senior advisor to determine, in detail, the potential synergies identified during the transaction, and develop an action plan.
The selected company was Accenture, a multinational corporation dedicated to providing consulting services, specializing in business transformation and implementation of "core" processes.
Accenture also has a strong relationship with GPA and deep knowledge of the organization, especially in synergies for “Casas Bahia” and “Ponto Frio” banners.
In addition to this advisory, in order to give drive to the process, a committee of the highest-level synergies, comprised by executives from Colombia and Brazil, countries that have the greatest opportunities identified, has been implemented. Its main functions are to quantify synergies in detail and seek new ones; define priorities and have an implementation schedule, promote internal teams, realize early profits (Quick Wins), among others.
Also, a working group between Colombia, Argentina and Uruguay has been formed, focused on achieving added value among the three Spanish-speaking countries.
Synergies Committee structure:
- Chief Operating Officer
- Vice-President for International Business
- Director of Strategy and Planning
- Vice President of Infrastructure and Strategic Development
- Financial Vice-President
- Director of Strategy and Planning
The synergies identified are initially valued at USD160 million per annum to be captured progressively over the next four years, and are expected to contribute to the Group's consolidated EBITDA by about 50 bps.
Since the negotiation and by the consolidation of the Committee, the Group has identified synergies of various types, such as:
– Bringing the Colombian textile model to Brazil and Argentina to increase the participation of this category in the hypermarkets of these countries.
– Bringing the ecommerce knowledge of Cnova, second player in South America, to promote greater growth in electronic commerce in Colombia, Uruguay and Argentina.
– Developing the Cash and Carry (wholesale) business, which still under developed in Colombia, while in Brazil is strong with the Assaí brand.
– In terms of procurement, joint negotiations are expected to optimize conditions, since with this transaction Grupo Éxito now has the largest marketing and purchase of appliances and digital electronics platform in the region.
– Developing unified private label products.
– Generating greater efficiency through shared services, especially in administrative processes.
– Achieving a joint optimization of the investment capabilities of each country.
The first stage of the process is of five weeks and includes the presentation and analysis of the idea until the action plan creation. The implementation stages can take from 3 to 12 months depending on the synergies. It is then expected, that in the coming 12 months the process start to deliver material results.
However, the Group is already working on projects that will deliver quick wins in the coming months. These include:
- Unification of the extended warranty business model.
- Joint procurement of large IT vendors.
- Optimization of regional service providers.
Grupo Éxito Investor Relations
Tel (+574) 339 6560