Supermarket giant Wal-Mart Stores Inc is launching a cash bid for Chilean supermarket group Distribucion y Servicio D&S SA, in a move that will give it a significant foothold in the South American market.

Wal-Mart has offered US$0.408 per common share, representing a 37.4% premium on the average closing price over the past month. The tender is expected to commence tomorrow (23 December), the company said.

As a condition of the offer, Wal-Mart said it must acquire a minimum of 50.01% of D&S's fully-diluted common shares.

The Ibañez family, the current D&S controlling shareholder, has already agreed to tender an unspecified portion of shares.

The family will enter into a long-term stockholders' agreement with Wal-Mart regarding D&S, which will continue to operate with its existing leadership, associates and brands.

Wal-Mart said moving into Chile is an important step in its international strategy.

"A successful tender offer will give Wal-Mart the opportunity to be a significant participant in Chile, which continues to have a strong and growing economy among South America countries," said Michael T Duke, vice chairman, Wal-Mart Stores.

Although D&S' core business is food retail, it also sells clothing in its Hiper Lider hypermarket chain.