FEMSA (FMX) Buys Big John, Enhances Operations In Chile

In an attempt to strengthen its portfolio, Fomento Económico Mexicano, S.A.B de C.V (NYSE:FMX) , also known as FEMSA, acquired a leading convenience store operator, Big John.

Based in Santiago, Chile, Big John is a grocery store that operates about 49 outlets, particularly in the Santiago metropolitan region. Given its renowned status and solid growth prospects, the acquisition of Big John is likely to enhance FEMSA Comercio’s operations by introducing significant convenience store know-how in Chile.

FEMSA has been focused on achieving growth via acquisitions for a while now. Evidently, the company acquired a major stake in South America’s leading drugstore operator, Grupo Socofar, in Sep 2015 through its FEMSA Comercio unit. This acquisition not only provides avenues for expansion in South America but also brings beauty store operations under its ambit.

Moreover, the company has been diversifying its retail chain format operations and acquiring businesses across Latin America. To date, FEMSA Comercio has considerably extended its footprint in the small-format retail chains in Mexico, Chile and Colombia.

Prior to Socofar, FEMSA concluded the buyout of Mexican drugstore operator, Farmacias Farmacón that helped enrich its knowledge and experience in the drugstore industry. These acquisitions are likely to help the company expand across geographies and tap significant opportunities in the future.

Notably, FEMSA Comercio now operates under three reporting divisions − Fuel, Health and Retail. The retail division operates a chain of convenience stores in Mexico under the brand name, OXXO. The latest acquisition further highlights FEMSA’s commitment toward taking prudent steps to diversify its product portfolio while expanding its small-box retail segment, which bodes well for future operating performance.

Zacks Rank

FEMSA currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Primo Water Corporation (NASDAQ:PRMW) , with a Zacks Rank #1 (Strong Buy). Some well-ranked stocks in the related alcohol-beverage industry include Molson Coors Brewing Company (NYSE:TAP) , with a Zacks Rank #1 and Constellation Brands Inc. (NYSE:STZ) , with a Zacks Rank #2 (Buy).

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