Chile's Ripley Corp SA stock surges after report on Liverpool SAB buying a stake

Chile’s third-largest department-store operator, Ripley Corp SA, posted Wednesday its biggest gain on record on the trading floor after Mexican media reported the alleged investment in the company by Mexican biggest department store, El Puerto de Liverpool SAB.

Mexico’s biggest department store will reportedly acquire 50 percent of the Chilean retailer, publishes Bloomberg quoting Excelsior’s columnist Dario Celis’ information.

To date, the value of the reported deal remains undisclosed.

On the wake of the news, shares of Ripley, which also operates banks and provides credit cards in the Andean region, surged 35 percent to 293.88 pesos on Wednesday in Santiago. According to Sebastian Hartmann, an analyst at Banco Penta who recommends investors buy Ripley shares, this jump responds to the speculation that a bid could involve a public tender offer to existing shareholders.

Ripley´s shares bounce after news break on potential stake acquisition by Liverpool

"Our own analysis shows Ripley trading at a deep discount, so investors bet that an offer would be much higher," Hartmann said from Santiago, reports Bloomberg. Ripley’s shares were down 31 percent in the 12 months through Tuesday, versus a 4.8 percent drop in the same period for the IPSA benchmark stock gauge.

Meanwhile, Liverpool stock fell 3.2 percent to 217.09 pesos in Mexico City, weighting its gain over the past year to 39 percent. It only has operations in Mexico, while Ripley has businesses in Chile, Peru and Colombia.

"Ripley has been studying different options for its operations in Colombia and in other countries in the region for which it has been in talks with players in the Colombian and international market," CEO Lazaro Calderon said in a filing earlier this week.

Liverpool and Ripley “have held discussions without agreeing to anything so far,” further added the Mexican retailer in a statement to the Mexican stock exchange.

Ripley is controlled by the Calderon Volochinsky family with a 53 percent stake in the retailer, according to its most recent annual report. In 2007, Ripley signed a deal with Grupo Palacio de Hierro SAB to create a joint venture to open stores in Mexico. Both companies announced the end of the partnership in 2010 after failing to open a single store.