Walmart de Mexico has struck a deal to buy Walmart Centroamerica, a retailer with over 500 stores in five Central American markets.
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The transaction, announced yesterday (6 December) for a mix of cash and shares in Walmart de Mexico, will see the Mexican retailer become the 100% owner of a business that has stores in Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica.
Walmart de Mexico, or Walmex as the business is commonly known is Mexico’s largest retailer and has Wal-Mart Stores as its majority shareholder.
The company has bought Walmart Centroamerica from the US retail giant and other minority investors through a cash-and-shares deal.
Walmex said “most of the transaction” will be paid through issuing new shares in its business which will be issued as a result of the merger with Walmart Centroamerica.
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By GlobalDataWal-Mart Stores and a “substantial percentage” of Walmart Centroamerica minority shareholders have agreed to receive new Walmex shares, the Mexican retailer said.
A smaller portion of the minority stockholders agreed to receive cash payments totalling around MXN1.4bn (US$) for their participation in the transaction.
Wal-Mart Stores owned a 51% stake in Walmart Centroamerica but Walmex president and CEO Eduardo Solorzano said the US company had confidence in the “leadership” of the Mexican retailer.
“Walmart Centroamerica is a profitable company, and has a proven management team that has taken it to high profitability and efficiency levels. Additionally, it serves a market that is very similar to the Mexican market,” Solorzano said.
“In the course of several years, Walmart de Mexico and Walmart Centroamerica have shared the implementation of best practices, and have identified synergies that now, with this transaction, offer several opportunities for the integration of both businesses.”
Walmart Centroamerica has 519 stores, 11 distribution centers and one agro-industrial operation that supplies products to the stores in the region. Sales for the 12 months to September 2009 amounted to the equivalent of US$3.3bn, Walmex said.
