Fomento Económico Mexicano (Femsa) announced a definitive agreement with Delek US Holdings Inc. to acquire 249 stores. This acquisition, valued at $385 million net of cash and debt, includes inventory from stores primarily located in Texas, furthering Femsa’s strategic expansion into the North American convenience and mobility sector.
Expansion Strategy
Femsa, a major player in the convenience store industry through its Oxxo brand, has long aimed to penetrate the U.S. market. José Antonio Fernández Garza-Lagüera, CEO of Proximidad y Salud, emphasized that this acquisition is a critical step in fulfilling their ambition to enter this attractive market. “At Femsa, we have long had the ambition to enter the convenience and mobility sector in the United States, and this transaction represents the ideal way to take our first step in this attractive market,” said Garza-Lagüera.
The deal involves stores currently operating under the DK brand, with approximately 90% located in Texas and the remainder in New Mexico and Arkansas. These locations are primarily gas station stores, which include a small fuel transport fleet under the DK and Alon fuel brands.
Strategic Importance
Femsa’s expansion into the U.S. is part of a broader strategy to capitalize on the highly fragmented $850 billion convenience and mobility market. The company, also known for its Coca-Cola bottling operations, sees this as a lucrative opportunity due to the market’s scale and potential for growth. “For Femsa, this market fits its strategy and offers an opportunity to build a platform that, over time, has the potential to achieve scale and create value for its shareholders,” the company stated.
Garza-Lagüera highlighted Femsa’s extensive experience in building and expanding retail operations, noting their successful growth in Mexico and other countries. “We have built and grown our retail operation in Mexico for over 45 years, eventually reaching ten other countries in South America and Europe, and achieving a store base of over 30,000 locations,” he remarked. This acquisition will allow Femsa to leverage its expertise and explore new retail-focused value propositions in the U.S. market.
Market Potential
The U.S. convenience store sector offers significant opportunities due to its size and fragmentation, with over 150,000 locations nationwide. Femsa believes that operators with the right capabilities and scale can thrive in this market. By acquiring Delek’s stores, Femsa positions itself to experiment and refine its retail strategies, setting the stage for further expansion and integration into the U.S. market.
As Femsa welcomes its new colleagues from DK into the family, the company is poised to embark on this important project, aiming to replicate its success in other international markets. The acquisition not only marks a new chapter for Oxxo but also underscores Femsa’s commitment to becoming a leading player in the global convenience store industry.