Mexican Retail Group Plans to Buy CompUSA

A retail group controlled by Mexican billionaire Carlos Slim Helu and his sons said Monday it will buy CompUSA, the struggling U.S. computer retailer, in a deal that positions the Slims for further penetration into hemispheric markets for Internet-related businesses.

The deal also strengthens a partnership between the Slim family empire and Microsoft Corp., which becomes a minority owner of CompUSA. The two enterprises agreed in October to jointly launch a Spanish-language Internet portal.

The Slim enterprises already include Telefonos de Mexico, the privatized national phone company known as Telmex, and Prodigy, the U.S. Internet provider. Adding a U.S. computer retailer with online and store sales channels could help harness cross-border synergies in selling consumer technology, analysts said.

By purchasing CompUSA for $798 million in cash through its Grupo Sanborns subsidiary, the Slims will also put to the test in the U.S. market their turnaround skills, honed over three decades in Mexico’s turbulent economy.

Grupo Sanborns, the retailing arm of the Slims’ Grupo Carso holding company, said it would pay $10.10 for each common share of the stock it didn’t already hold. That is a 50% premium over the retailer’s Friday closing price of $6.75.

The CompUSA share price surged Monday by 40% to close at $9.50 on the New York Stock Exchange. Grupo Sanborns shares, which trade separately on the Mexican bolsa, soared 6.1% on the news.

Sanborns, which already owned 14.8% of CompUSA, controls the national Sanborns retail chain, which is leading the nascent foray into e-commerce in Mexico.

“I think [the buy] clearly reinforces the whole dot-com-ish element of Grupo Sanborns,” said Justin McGowen, Latin America retail analyst with ING Barings in New York.

The Slim family’s successes include Sears de Mexico, bought in 1997 and since built into one of Mexico’s premier retailing operations. Such deals have made Carlos Slim Helu, 59, Latin America’s richest man and the 27th wealthiest in the world, according to Forbes magazine.

Slim Helu’s oldest son, 32-year-old Carlos Slim Domit, is chairman of the family’s Grupo Carso holding company and runs its commercial operations as CEO of Grupo Sanborns.

Slim Domit said in an interview that Grupo Sanborns would be buying an additional 36% of CompUSA, giving it a total of 51%, and that other partners--Telmex, Microsoft and SBC Communications--would hold 49%.

Financing details and the exact ownership positions of the minority partners are still being worked out, Sanborns said.

SBC, the telecommunications giant that owns Pacific Bell, also owns a minority stake in Telmex.

Slim Domit said in the formal announcement that the deal “allows us to capitalize on the track records of Telmex, Microsoft, SBC and Prodigy for marketing consumer technology and telecommunications products and services.”

Both companies have vast national retailing operations. Grupo Sanborns operates 305 stores in Mexico, from big Sears stores to neighborhood Sanborns general stores and its Mixup music outlets. Sanborns, which employs more than 30,000, launched the first national e-commerce Web site in Mexico in September.

The group’s sales were up 9.5% and operating profit up 18.8% in the nine months ending Sept. 30.

Dallas-based CompUSA has 217 stores with 20,000 employees. It has closed a number of unprofitable branches and cut jobs as personal computer prices have fallen and with them profit margins on PCs that are increasingly sold as commodity products. The company lost $45.7 million in its most recent fiscal year, and the stock price has been at a five-year low.

As online PC sales have grown and hurt in-store sales, CompUSA has sought to grow its e-commerce operation and to broaden its product lines into consumer electronics.

Analysts said CompUSA’s computer expertise and growing online sales operations could be extended into Latin America, where per capita computer usage lags far behind U.S. levels. That, in turn, could fuel Internet-related phone service south of the border, a key goal for the Slims’ Telmex and Prodigy operations.

Telmex and Prodigy already have teamed to offer a quality Pentium PC, Internet service and often a second phone line, all paid off in installments charged on the monthly phone bill.

“We think there’s a lot of good synergy in terms of telephony, the Internet and PC distribution.” said Suzanne Shelton, CompUSA spokeswoman.