Mexico’s Grupo Gigante to buy Office Depot’s stake in Mexican JV for $687.34 mn

Mexican retailer Grupo Gigante yesterday said that it will buy its US partner Office Depot's 50-per cent stake in their Mexican office-supply chain joint venture Office Depot de Mexico, for 8.78 billion pesos ($687.34 million).

Early this month, Bloomberg reported that Grupo Gigante was in talks with local banks for buying Office Depot's stake, which is estimated to be worth around $700 million. (See: Office Depot seeks to sell Mexican joint venture unit: report)

Grupo Gigante entered into an equal joint venture in 1994 to form Office Depot de Mexico, which sells various office stationery products, equipment, related goods, and services through more than 200 stores, including in Colombia and Central America.

Office Depot, which this week offered to buy its smaller local rival OfficeMax for $1.2 billion, is selling its stake after its leading shareholder Starboard Value LP with nearly 15 per cent, pressurised it to improve earnings by cutting general expenses, lower advertising costs and move to smaller stores.

Till 29 September 2012, Office Depot de Mexico generated revenues of $860.8 million, of which Office Depot's share of earnings was about $24 million, according to Bloomberg.

Founded in 1962, Mexican Stock Exchange-listed Grupo Gigante has interets in supermarkets, restaurants, real estate, animal supplies, specialty single cup coffee through Home Store, Panda Express, Gigante Grupo Inmobiliario, Restaurantes Toks, and Cup Stop.

Until 2008, it had a joint venture with RadioShack. Last month it entered into a joint venture with US pet product supplier Petco Animal.