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FEMSA (FMX) to Buy Europe's Valora to Expand Retail Presence

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Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, has agreed to buy all the publicly held shares of Valora Holding AG, a leading foodvenience platform with convenience stores and food service operations in Switzerland, Germany and other European countries.

The companies have agreed to a purchase price of CHF 260.00 per share, suggesting a 57.3% premium to the volume-weighted average share price of the last 60 trading days and a 52% premium to Valora’s closing share price on Jul 4, 2022. FEMSA expects to complete the all-cash acquisition deal using its available cash on hand.

FEMSA is a leading convenience store operator in Mexico and Latin America through its Proximity Division. The acquisition of Valora is expected to expand and develop its proximity retail business in markets outside Latin America. Upon the completion of the acquisition, Valora will operate as the retail wing of FEMSA’s Proximity Division in European markets and further expand its presence in Europe.

Following the completion of the acquisition, Valora will continue to operate under its brand name and retain its formats and concepts in sync with the current management’s expansion and operating plans. Valora will continue to have its headquarters and registered office in Muttenz, Switzerland.

The companies expect the transaction to create a formidable player in Europe’s convenience store and food service market, catering to the increased mobile and digital client base. The transaction also creates excellent opportunities for both companies, with benefits to all stakeholders. FEMSA is poised to leave a mark in the international market, which it has been planning for long.

Meanwhile, Valora is expected to gain from FEMSA’s unique set of capabilities and initiatives it has developed in other markets. FEMSA’s long-standing position in the retail channel and expertise are likely to help Valora accelerate its growth plans for expansion in the European markets, benefiting both companies.

FEMSA has launched a public tender cash offer to acquire all of Valora’s shares. The transaction is subject to customary closing conditions and regulatory approvals. The companies expect the transaction to be settled by the end of September or the beginning of October 2022. Following this, Valora is planned to be delisted from SIX Swiss Exchange.

Shares of FEMSA have lost 17% year to date against the industry’s growth of 0.2%. The company currently has a Zacks Rank #2 (Buy).

 

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Zacks Investment Research


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Despite a soft earnings performance, FEMSA has been delivering a robust revenue trend, reporting a beat in the last four quarters. Revenue growth continues to be aided by gains across all business units. FEMSA’s digital initiatives and business expansion endeavors also act as upsides. Its efforts to expand in the U.S. specialized distribution segment also bodes well.

Other Stocks to Consider

We have highlighted three other top-ranked companies in the Consumer Staples sector, namely Sysco SYY, The Duckhorn Portfolio NAPA and The Coca-Cola Company KO.

Sysco presently sports a Zacks Rank #1 (Strong Buy). The SYY stock has rallied 8.5% year to date. The company has an expected long-term earnings growth rate of 11%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Sysco’s sales and EPS for the current financial year suggests growth of 32.5% and 124.3%, respectively, from the year-ago reported levels. The consensus mark for earnings has been unchanged in the past 30 days. SYY has a trailing four-quarter earnings surprise of 9.1%, on average.

Duckhorn Portfolio currently has a Zacks Rank #2. The company has an expected long-term earnings growth rate of 12.2%. Shares of NAPA have declined 9.4% year to date.

The Zacks Consensus Estimate for Duckhorn Portfolio's current financial year’s earnings per share has been unchanged in the past 30 days. The Zacks Consensus Estimate for NAPA’s sales and EPS for the current financial year suggests growth of 10.8% and 6.9%, respectively, from the year-ago reported levels. NAPA has a trailing four-quarter earnings surprise of 94.4%, on average.

Coca-Cola currently has a Zacks Rank #2. The company has an expected long-term earnings growth rate of 7%. Shares of KO have risen 6.9% in the year-to-date period.

The Zacks Consensus Estimate for Coca-Cola’s current financial year’s earnings per share has been unchanged in the past 30 days. The Zacks Consensus Estimate for KO’s sales and EPS for the current financial year suggests growth of 8.9% and 6.5%, respectively, from the year-ago reported levels. KO has a trailing four-quarter earnings surprise of 13.6%, on average.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CocaCola Company The (KO) : Free Stock Analysis Report
 
Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report
 
Sysco Corporation (SYY) : Free Stock Analysis Report
 
The Duckhorn Portfolio, Inc. (NAPA) : Free Stock Analysis Report
 
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