North West acquistion of Cost-U-Less a boon for both cos.

BELLEVUE, WASH. —At a special meeting held Dec. 10, 2007, warehouse club operator Cost-U-Less said its shareholders voted to approve the proposed acquisition by The North West Co. pursuant to their Agreement and Plan of Merger, dated Aug. 27, 2007. The North West Co. is a subsidiary of the Winnipeg-based North West Co. Fund, which owns retail and distribution assets in Canada and Alaska.

Cost-U-Less was developed to provide high-quality U.S. and local goods, primarily to island markets in the Caribbean and Pacific region, through 11 warehouse club-style stores including two each in the U.S. Virgin Islands, Netherlands Antilles, Guam and the Hawaiian Islands and one each in California, American Samoa and the Republic of Fiji.

North West is used to dealing with stores in remote locations. Over 300 years old, it is the leading provider of food and everyday products and services to remote communities across northern Canada and Alaska. At one point in its history, it became the Northern Stores Division of Hudson’s Bay Co. In 1987, the Northern Stores Division was acquired by private investors including a group of 415 employees. In the1990s, North West acquired the Alaska Commercial Co. Today, it operates more than 200 retail outlets in British Columbia, the Yukon Territory, the Northwest Territories, Alberta, Saskatchewan, Manitoba, Ontario, Nunavut, Quebec and Labrador as Northern, NorthMart, Quickstop and Giant Tiger. In Alaska, it operates 29 stores under the AC Value Centers banner, as well as one AC Quickstop unit. Stores offer both food and general merchandise.

North West also operates a catalog operation. Cost-U-Less, which has been generally successful in running its stores, but less successful in growing the chain, will benefit from the merger, which will combine the chain with a larger entity that can provide leverage and, potentially, help in expansion. For its part, North West is afforded new access to a number of markets including, with the Cost-U-Less unit operating in California, the United States.

Commenting on the initial acquisition bid, Cost-U-Less president and ceo Jeffrey Meder said, “Cost-U-Less has built a solid business that is poised for an even better future with strong partners at our side. We believe North West shares many similar values with Cost-U-Less and has a strategic approach that is very similar to our own. This transaction represents the culmination of years of planning for our next strategic chapter, and we are delighted that, even with our shares trading at historically high levels, the transaction will deliver a meaningful premium to our shareholders.”

On Dec. 14, 2007, North West further noted that it had completed the Cost-U-Less acquisition and simultaneously announced the opening of a new unit in the Cayman Islands. “We are pleased to close our transaction with Cost-U-Less and move forward with our integration and growth plans,” said North West president and ceo Edward Kennedy. “Cost-U-Less is a great strategic fit with our capabilities in serving unique, physically distant markets. Today’s Grand Cayman opening is an example of another new format we can offer as a compelling alternative to retail chains focused on larger markets.”