FEMSA Expands Drugstore Chain - Analyst Blog
May 14 2013 - 1:36PM
Zacks
In an effort to expand its convenience store chain business,
Fomento Economico Mexicano SAB de CV (FMX) or
FEMSA announced that its retail subsidiary – FEMSA Comercio – has
acquired Farmacias FM Moderna on Monday. Farmacias FM Moderna
is a leading drugstore operator in the western state of Sinaloa,
Mexico and currently operates over 100 stores in the region.
Details about the transaction have not been provided by the
company.
The owner of Coca-Cola FEMSA (KOF), which is
the world’s largest franchise bottler of The Coca-Cola
Company (KO) products, is taking prudent steps to
diversify its product portfolio while expanding its convenience
store chain, which augurs well for future operating
performance.
This Zacks Rank #3 (Hold) company is aggressively seeking to
capitalize on the growing opportunities for the drugstore business
in Mexico. Earlier this month, the company acquired a 75% stake in
a leading drugstore operator in Southeast Mexico – Farmacias YZA.
We believe that the company’s foray into the drugstore business
strategically fits its store chain business, which will be
accretive to its top and bottom lines in the long term.
FEMSA, which competes with Coca-Cola Enterprises
Inc. (CCE), has a healthy balance sheet with cash and cash
equivalents of Ps. 28.855 billion ($2.336 billion) at the end of
first-quarter fiscal 2013. This huge cash balance was primarily an
outcome of the sale of its beer business to Heineken NV in 2010 in
exchange for a 20% stake in Heineken.
We believe that FEMSA is aptly utilizing its available funds to
focus on the core bottling and convenience store operations as well
as to implement organic and inorganic expansion plans. In the first
quarter of fiscal 2013, FEMSA incurred capital expenditure of
Ps.3.213 billion ($0.260 billion), mainly toward incremental
investments at Coca-Cola FEMSA to increase the capacity in
Columbia.
COCA-COLA ENTRP (CCE): Free Stock Analysis Report
FOMENTO ECO-ADR (FMX): Free Stock Analysis Report
COCA COLA CO (KO): Free Stock Analysis Report
COCA-COLA FEMSA (KOF): Free Stock Analysis Report
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