Mexico's Femsa Acquires Retail Assets from Delek U.S. for $385 Million — Update

By Michael Susin and Anthony Harrup

Mexican retail and beverages company Fomento Económico Mexicano is making its first move into the U.S. convenience store market with an agreement to buy the retail business of Delek US Holdings for $385 million.

Femsa, as the Mexican company is known, said Thursday that the deal on a cash-free and debt-free basis includes 249 convenience stores and the purchase of inventories. The acquisition is expected to close sometime late in the third quarter or in the fourth quarter.

Delek US Holdings is a diversified downstream energy company with assets in petroleum refining, logistics, pipelines, renewable fuels and convenience store retailing operating mostly in the southwestern U.S. Femsa said about 90% of Delek's stores are in Texas, and the rest primarily in New Mexico. Nearly all are located at gas stations.

Femsa is flush with cash after selling assets to focus on its core soft drinks, retail and digital businesses. The company has 22,658 Oxxo convenience stores in Mexico and others elsewhere in Latin America. Femsa also runs 570 service stations in Mexico under the Oxxo Gas brand.

Femsa cited Chief Executive José Antonio Fernández as saying entry into the U.S. convenience store market is a long-held ambition of the company.

"The Delek stores have the right set of attributes to be Femsa's first step on this journey, in terms of size, geographical footprint, and possibilities for extensive experimentation, testing, and fine-tuning of the company's convenience value proposition," Femsa said. "The appeal of the Oxxo brand may be relevant in certain markets served by the DK stores."

Delek Chief Executive Avigal Soreq said the sale provides the U.S. company with a competitive partner "for ongoing and expanded retail fuel sales."

Write to Michael Susin at michael.susin@wsj.com and Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

August 01, 2024 13:18 ET (17:18 GMT)

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