FMX Fomento Economico Mexicano SAB De CV

By Anthony Harrup

MEXICO CITY--Mexican retail and soft-drinks company Fomento Economico Mexicano SAB is making its first move into Europe with an offer to buy Switzerland-based operator of kiosks and convenience stores Valora Holding AG.

Femsa, the world's largest Coca-Cola franchise bottler by volume through unit Coca-Cola Femsa, also operates 20,500 Oxxo convenience stores and more than 3,700 drugstores in Mexico and elsewhere in Latin America, as well as close to 600 service stations in Mexico. It also has large logistics and distribution operations.

"We have been looking for some time to expand our retail business, especially in developed markets," said Francisco Camacho, Femsa's chief corporate officer. "With Valora we found a strategic fit, and Europe allows us to fulfill this strategy."

Femsa will also continue to expand in Mexico and Latin America, Mr. Camacho added.

Valora has more than 2,700 retail outlets, including kiosks and convenience food stores in Switzerland, Germany, Austria, Luxembourg and the Netherlands. Valora will continue to operate under its name as a part of Femsa's retail division.

Valora's focus on convenience and food service could generate value for Femsa in the Americas, where the Mexican company has been seeking to develop fast-food capabilities, said Mario Botas, who heads corporate development and new business at Femsa retail.

Among Oxxo's possible contributions to the Valora business are its ability for rapid store openings and efficiency in operating stores, Mr. Camacho said.

Femsa is offering 260 Swiss francs ($267.80) a share for Valora, 52% above its Monday closing price. Valora shares rose 51% Tuesday. Femsa plans to pay for the acquisition in cash, and will assume Valora's net debt of some CHF222 million. The companies expect the deal to close in late September or early October.

Although Valora's contribution to Femsa's consolidated cash flow would be small, and the price represents a premium over Femsa's valuation, it would give the Monterrey-based company a strategic foothold in Europe, analysts at Grupo Financiero Banorte said in a note.

Femsa shares were down 6.9% on the Mexican stock exchange Tuesday afternoon.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

July 05, 2022 15:33 ET (19:33 GMT)

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