(Adds details on deal, background on companies)
SANTIAGO/LIMA, Sept 17 (Reuters) - Chile-based retailer Falabella said on Wednesday it had bought leading Peruvian home improvement chain Maestro for about $490 million as it seeks to increase its presence in Peru's fast-growing economy.
Falabella, operating through its eponymous department store chain and its Sodimac home improvement chain, is one of South America's largest retailers. It said it had purchased all of Maestro for 1.40 billion Peruvian sols ($490 million).
Maestro, controlled by Peruvian private equity firm Enfoca, is Sodimac's main competitor in Peru, with some 30 stores, 4,000 employees and annual sales of 1.47 billion Peruvian sols.
It has expanded aggressively in recent years, seeking to take advantage of Peru's growing middle class and robust housing market. Although the Andean country's economy has slowed recently, it is still expected to expand by 4 percent in 2014.
The 125-year-old Falabella, meanwhile, has sought to cushion itself against market volatility by diversifying into different sectors and countries.
"With this transaction, Maestro Peru will become part of the Falabella group, allowing the group to reaffirm its commitment to the development and growth of the home improvement sector in Peru," Falabella said in a statement.
Shareholders in Falabella Peru will be asked to approve a related $420-million increase in capitalization.
$1=2.8580 Peruvian sols Reporting by Rosalba O'Brien and Patricia Velez; Editing by Chizu Nomiyama; and Peter Galloway