SM Buying 2 PriceSmart Stores

The SM Group, which has the country’s biggest chain of department stores and supermarkets, is in the thick of negotiations with PSMT Philippines for the purchase of two PriceSmart outlets, a source said.

According to the source, the Henry Sy owned company is wrapping up its due diligence on two PriceSmart outlets in Alabang and Fort Bonifacio. The source further said that SM is now preparing a tender offer for the two outlets.

The possible plan, the source said, is to convert the two outlets into the hypermart concept, which is a combination retailing and wholesaling. At present SM has only two hypermarts in SM North and Mall of Asia.

Aside from the its chain of department stores and supermarkets in the country, the SM Investments Corp. also owns about 40% in Pilipinas Makro Inc., the country’s biggest wholesaler.

PSMT operates four warehouse clubs in Alabang, Congressional Road in Quezon City, Fort Bonifacio and Baclaran. It closed its outlet in Ortigas and is now under lease.

According to the source, PSMT Philippines which is majority owned by businessman William Go is retaining two PriceSmart outlets in Baclaran and the Congressional Road with plans of converting these into the ‘Cost-U-Less’ outlets.

Go has plans of expanding the mass-based concept in Cost-U-Less express supermarkets. Cost-U-Less has a lone outlet in Pasig.

After the successful buyout of the majority stake of PriceSmart US in PSMT Philippines, Go revealed plans of turning around the losing high-end exclusive warehouse shopping outlet into a profitable venture by shifting towards the sale of more ‘mass-based’ products.

PriceSmart has a membership base of 50,000 to 60,000 customers.

PSMT Philippines was organized in 2000 with PriceSmart US owning the majority of 52%, 38% by E-Class and 10% by First Metro Investment Corp. (BCM)