Costco (COST) plans to buy out its joint venture partner Comercial Mexicana’s 50% stake in its Mexican business for 10.7 billion pesos, or about $760 million.
The unit, Costco Mexico, which has been equally owned by both parties since the 1990s but operated by Costco Wholesale, declared a cash dividend of 4.8 billion pesos, about $340.85 million, to be split evenly between Costco and the locally-based supermarket chain Comerci.
Proceeds will be used by Costco Wholesale, which currently operates 602 warehouses, including 32 in Mexico, to fund the purchase along with existing cash, while Comerci will use proceeds to pay down its own debt.
The deal is subject to approval by the Mexican Federal Competition Commission and Comerci's shareholders.
Comerci’s chairman, Guillermo Gonzalez Nova, and CEO, Carlos Gonzalez Zabalegui, will continue as members of the board of Costco Mexico, while Jaime Gonzalez Solana will maintain the position as CEO of Costco Mexico.