Walmex to Buy Walmart Centroamerica, Add 519 Stores (Update1)
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By Sarah Shannon and Andres R. Martinez
Dec. 7 (Bloomberg) -- Wal-Mart de Mexico SAB, Latin America’s largest retailer, said it will acquire the operations of Walmart Centroamerica in a transaction that adds stores in five countries and about $3.3 billion of annual sales.
The acquisition will be funded mostly through the issue to Walmart Centroamerica investors of new shares in Walmex, as the company is known. Walmex will also make a cash payment of 1.4 billion pesos ($110.5 million), it said today in a statement.
Bentonville, Arkansas-based Wal-Mart Stores, Inc., the world’s largest retailer, owns 51 percent of Centroamerica and about two-thirds of Walmex. Centroamerica has 519 stores located in Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica and will add “additional growth opportunities,” according to Walmex President and Chief Executive Officer Eduardo Solorzano.
“The support of Wal-Mart Stores, Inc. to this deal is a sign of confidence in the leadership of our company, and in the value creation that this will represent for consumers in Mexico and Central America as well as Walmart de Mexico shareholders,” Solorzano said in the statement.
Walmex will issue 593 million new shares to Walmart Centroamerica shareholders. A further 55 million shares will be held as so-called treasury stock and issued when the company meets unspecified profit targets, according to the statement.
Walmart and a “substantial percentage” of Walmart Centroamerica minority shareholders agreed to receive new Walmex shares, while a smaller portion chose a cash payment.
The Mexico City-based company will present the purchase to shareholders for approval at a Dec. 22 meeting.
Walmex rose 1.05 pesos, or 1.9 percent, to 57.48 pesos at 8:59 a.m. local time on the Mexican Stock Exchange. The shares have risen 67 percent in the past 12 months.
To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net; Andres R. Martinez in Mexico City at amartinez28@bloomberg.net;
Last Updated: December 7, 2009 10:05 EST
