Mexican Distributor Acquires CompUSA

WASHINGTON (01/24/2000) - Beleaguered CompUSA Inc., one of the largest computer retailers in the U.S., today announced that the Mexican retailer Grupo Sanborns S.A. de C.V. plans to buy all outstanding shares of the company for US$10.10 per share in cash.

Grupo Sanborns, which already indirectly owns approximately 14.8 percent of CompUSA's shares, will launch a tender offer for the remaining common shares, Grupo Sanborns and the Dallas-based CompUSA said in a press release. The agreement has been unanimously approved by the board of directors of CompUSA.

Sanborns expects to be able to invest in CompUSA, whose net sales were down 21 percent in its most recent quarter, through partnerships with Microsoft Corp., Southwestern Bell Communications Inc., Telefonos de Mexico, S.A. de C.V.

(Telmex) and Prodigy Communications Corp., the release said.

The partnerships will allow Sanborns a chance to capitalize on the track records of Telmex, Microsoft, SBC and Prodigy for marketing consumer technology and telecommunications products and services, Carlos Slim Domit, chairman of Grupo Sanborns, said in the release.

Sanborns in turn will have an opportunity to leverage its management experience in the retail and e-commerce sectors. Sanborns owns 305 stores in major cities across Mexico, including Sanborns, Sanborns Cafe, Sears Roebuck de Mexico, Pasteleria el Globo, Mix-up and Discolandia. It also manufactures food, household and personal care products, all sold on the Web at Sanborns' portal site.

Investment from the technology and telecommunications companies could remake CompUSA into a store much more focused on services, particularly those related to broadband Internet access, and away from the inventory-laden requirements of the traditional retail store, analysts said.

"Margins in retail are extremely low in this industry now, and (CompUSA) is necessarily in the inventory game, which is a bad business to be in when the value of inventory declines by a percentage a week," said Roger Kay, an analyst for International Data Corp. in Framingham.

CompUSA, rumored as a takeover target for months, last year moved to increase its Web presence with the creation of the wholly owned online subsidiary The new subsidiary, launched in October, borrowed the Web-based direct-sale model used by Dell Computer Corp. and other PC manufacturers, but also competed directly with CompUSA.

Kay said, however, the subsidiary seemed to "sink beneath the waves" after making a big splash when it was launched.

Roger Lanctot, director of research at PC Data in Reston, Virginia, said expected investments from Microsoft and SBC Communications signaled that the retailing of broadband was on the horizon.

"I would see this as a broadband play," Lanctot said. "There is a big marketing and sales opportunity that is up for grabs. (CompUSA) will need all the leverage the partners to that acquisition bring to the party."

Retail stores are likely to play a big role in the distribution of broadband hardware and services to consumers through store kiosks where people could get information about DSL (digital subscriber line) and cable modems, Lanctot said.

"Broadband is taking things to another level," Lanctot said. "It will be more than just taking a product, marking it up and selling it. I think it's still not clear the full extent what role the retailer is going to play."

CompUSA, in Dallas, can be reached at +1-800-266-7872 or at