Canadian retail group North West Company Fund is to acquire Cost-U-Less (CUL), a warehouse retailer operating in the South Pacific and Caribbean, for US$52.2m.
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The transaction price, at $11.75 per share, represents a premium of around 13% over the 90-day average trading price of CUL common stock. North West is to finance the acquisition through a combination of cash on hand and existing credit lines.
The deal remains subject to customary terms and conditions, including approval by CUL shareholders, and is expected to close in two to three months. North West said it expects the acquisition to be accretive to earnings from the beginning of 2008.
Cost-U-Less operates 11 warehouse stores in the Caribbean and Pacific regions. It has two outlets in the US Virgin Islands, two in the Netherlands Antilles, two in Hawaii, one in California, two in Guam, one in American Samoa and one in Fiji. It also expects to complete the development of a further store in the Cayman Islands in the fourth quarter of this year. The company has an annual turnover in the region of $225m.
“Cost-U-Less is an exciting new chapter in our growth,” said North West president and CEO Edward Kennedy. “At first glance it may look different from what we do today but, in fact, it is an exceptional strategic fit with our capabilities in serving unique, physically distant markets.”
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