By Nathan Gill

     May 29 (Bloomberg) — La Polar SA, Chile’s best-performing retailer this year, fell in Santiago trading on speculation Omega SA’s merger offer undervalues the company’s department stores.

     The Santiago-based retailer slipped 0.9 percent to 1,927.9 pesos. The shares surged 15 percent yesterday for the biggest gain in seven months.

     Omega, controlled by Southern Cross Latin America Private Equity Fund III LP, is seeking a deal that would give La Polar shareholders 62 percent of the merged entity. Antonio Cruz, an analyst at Banco Santander SA, said La Polar shareholders should have about 70 percent of the new company.

     Under the offer, La Polar would exchange 135 million new shares at 1.07 per Omega stock, investment bank Larrain Vial SA wrote. That values La Polar at 513 billion pesos ($909 million), or 2,324 pesos a share.

      “The price and conditions that Omega are offering don’t look particularly advantageous for La Polar shareholders to us,” Raul Barros, an analyst at FIT Corredores de Bolsa SA, said by phone from Santiago today. FIT estimates that La Polar shares will end the year at around 2,000 pesos.