(By Balaseshan) Costco Wholesale Corp.'s (NASDAQ:COST) subsidiary has agreed to buy the balance 50% stake in its Mexican joint venture from Controladora Comercial Mexicana S.A.B. de C.V. for $760.4 million.
Costco de Mexico S.A. de C.V., which is operated by Costco Wholesale, has declared a cash dividend of about $340.85 million, 50% payable to a subsidiary of Costco Wholesale and 50% to the Mexican retailer.
Costco Wholesale said it would use the dividend proceeds and existing cash and investment balances to fund the purchase. Controladora Comercial Mexicana would use the dividend and sale proceeds to pay down debt.
The closing is subject to the approvals of the Mexican Federal Competition Commission and the shareholders of Controladora Comercial Mexicana.
Guillermo Gonzalez Nova, and Carlos Gonzalez Zabalegui, respectively Chairman and CEO of Controladora Comercial Mexicana, will continue as members of the Board of Directors of Costco Mexico. Jaime Gonzalez Solana will continue as CEO of Costco Mexico.
Costco Wholesale currently operates 602 warehouses, including 435 in the United States and Puerto Rico, 82 in Canada, 32 in Mexico, 22 in the United Kingdom, 13 in Japan, eight in Taiwan, seven in Korea and three in Australia. The company plans to open up to an additional 6 new warehouses prior to the end of its fiscal 2012.
COST closed Wednesday's regular session 1.21% at $87.43. The stock has been trading between $70.22 and $92.10 for the past 52 weeks.