8-KMaterial AgreementsRegulation FDExhibits & Filings

COSTCO WHOLESALE CORP /NEW 8-K Report, Material Agreement (Jun 18, 2012)

Filed June 18, 2012For Securities:COST

Summary

Costco Wholesale Corporation (COST) has filed an 8-K report detailing a significant transaction related to its Mexican operations. The company, through its indirect subsidiaries Costco Venture Mexico (CVM) and CVM Purchasing Subsidiary, S.A de C.V. (Acquisition Sub), has entered into a Stock Purchase Agreement to acquire the remaining 50% stake in Costco de Mexico, S.A. de C.V. from Controladora Comercial Mexicana, S.A.B. de C.V. (CCM). This acquisition will result in Costco taking full 100% ownership of its Mexican subsidiary. The total purchase price for the shares is MXN $10,650 million. As part of the transaction, Costco de Mexico has also declared a cash dividend of approximately MXN $4,774 million, with half distributed to CVM and half to CCM. This move signifies Costco's intent to consolidate its operations and potentially accelerate growth in the Mexican market. The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close in July 2012.

Key Highlights

  • 1Costco Wholesale Corporation is acquiring the remaining 50% stake in its Mexican subsidiary, Costco de Mexico, for MXN $10,650 million.
  • 2This acquisition will give Costco 100% ownership of Costco de Mexico, consolidating its control over the operations.
  • 3Costco de Mexico declared a dividend of approximately MXN $4,774 million, with proceeds shared between the buyer (CVM) and the seller (CCM).
  • 4The transaction is governed by a Stock Purchase Agreement, which includes standard representations, warranties, and covenants, such as a non-competition clause for CCM.
  • 5Closing of the acquisition is contingent upon obtaining approval from the Mexican Antitrust Commission and CCM shareholders.
  • 6The expected closing date for the transaction is July 2012.
  • 7The existing Joint Venture Agreement governing Costco de Mexico will be terminated upon the closing of this acquisition.

Frequently Asked Questions

This 8-K filing announces Costco Wholesale Corporation's entry into a material definitive agreement to acquire the remaining 50% of its Mexican joint venture, Costco de Mexico, thereby achieving full ownership.

Costco, through its subsidiaries, has agreed to pay MXN $10,650 million for the remaining shares of Costco de Mexico. Additionally, Costco de Mexico declared a dividend of approximately MXN $4,774 million.

The closing of the acquisition is subject to certain conditions, including approval from the Mexican Antitrust Commission and the shareholders of Controladora Comercial Mexicana (CCM).

This acquisition signifies Costco's move to full ownership and control of its Mexican operations, allowing for potentially more streamlined decision-making and strategic implementation in the market. It also leads to the termination of the previous joint venture agreement.