June 4 (Bloomberg) -- Grupo Gigante SAB, a Mexican owner of office-supply stores, agreed to buy half of a joint venture from Office Depot Inc. for 8.78 billion pesos ($690 million) in cash.
Gigante and its affiliates will have total ownership of Office Depot de Mexico after the deal is completed, Boca Raton, Florida-based Office Depot said today in a statement. The transaction requires approval from Mexican regulators and Gigante’s shareholders.
The deal allows Gigante to develop and operate Office Depot stores in Latin America, with the exception of the Caribbean, the Mexico City-based company said in a separate filing to the nation’s stock exchange. The companies agreed to use the Office Depot brand for 15 years in the region, which will be automatically renewed without additional cost, Gigante said.
Office Depot, the second-largest U.S. office-supply chain, is unloading its portion of the venture, which has more than 248 stores throughout Mexico and Central America, as it prepares to merge with OfficeMax Inc. The sale will result in about $550 million in after-tax proceeds, which Office Depot said it will use to pay off debt and redeem preferred shares.
Gigante announced in February it had offered 8.78 billion pesos for the stake. Gigante extended its offer past the March 15 deadline after Office Depot agreed to merger with OfficeMax. In May, Office Depot said it received consent from Naperville, Illinois-based OfficeMax to proceed with the Gigante negotiations.
Office Depot fell 2.5 percent to $4.35 at 10:28 a.m. in New York. The shares had gained 36 percent this year through yesterday, compared with a 15 percent gain for the Standard & Poor’s 500 Index.
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