28 August 2007 - North West Company Fund (NWF_u.TO: Quote, Profile, Research), a Canada-based retailer of food and everyday products, said on Monday it agreed to buy Cost-U-Less Inc (CULS.O: Quote, Profile, Research) for about $52.2 million to expand into remote markets in the South Pacific and Caribbean.
The per-share offer of $11.75 for the company reflects a premium of about 12 percent over its closing price of $10.51 Monday on the Nasdaq.
Cost-U-Less, which operates nearly a dozen warehouse club stores on remote island locations, has annual revenue of about $225 million.
North West said the deal will not provide any net contribution in the fourth quarter due to offsetting costs associated with integrating Cost-U-Less within its U.S. and Canadian operations.
The company, however, expects the acquisition to add to its earnings beginning 2008 and sees annual savings of $3 million from integration.
It will finance the deal, which is expected to close in two to three months, through a combination of cash on hand and existing credit lines.
North West has annual revenue of about C$1 billion and operates 206 stores under Northern, NorthMart, and Giant Tiger names across Canada and Alaska,
Shares of Cost-U-Less rose about 9 percent to $11.42 in morning trade.