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Dollarama Inc. has signed a deal to buy a 50.1 per cent stake in Latin American retailer Dollarcity.

Under the deal, Montreal-based retailer said the estimated purchase price was in a range from US$85 million to US$95 million based on financial projections provided by Dollarcity management.

Dollarama will make a US$40-million payment upon closing the deal and settle the balance in the third quarter of its 2021 financial year.

The Dollarcity board will include five directors including three Dollarama representatives and two representatives of the Dollarcity founding group.

The transaction, which is subject to customary closing conditions, is expected to close in August.

Dollarcity operated a total of 180 stores at March 31 including 44 in El Salvador, 54 in Guatemala and 82 in Colombia. It plans to have 600 stores by 2029.