FEMSA joint venture deal with Raizen in Brazil

Mexico based Fomento Economico Mexicano (FEMSA), a leading retail and beverage company, has reportedly announced that it will sign an agreement with Raizen to enter into a 50-50 joint venture. The collaboration aims at creating a powerful platform for FEMSA in the convenience store market in Brazil

According to trusted sources, through the transaction FEMSA Comercio will obtain 50% interest in Raizen Conveniencias. For the record, Raizen in itself is a joint venture between Shell and Cosan. Currently, the company operates over 6,200 shell service stations in Brazil, 1,000 of which now have a select brand convenience store.

Apparently, these stores are licensed by Raizen to separate operators. The agreed joint venture however is restricted to convenience store business and excludes fuel station operations.

As per reliable sources, the recently announced acquisition will establish a strong platform for growth in the future. While the penetration of convenience stores in Brazil is still low, Raizen has a strong footprint in the country. Additionally, FEMSA will provide its considerable expertise as a developer and operator of convenience stores of the small proximity format.

The transaction will benefit Raizen service stations by enhancing their growth avenues through increasing the presence of select convenience stores at their stations coupled with establishing value proportions for standalone stores operating under the OXXO brand.

Apparently, the enterprise value of Raizen Conveniencias for the agreement is R$1,122 million and is free of debts and cash. FEMSA Comercio’s 50% interest accounts for R$561 million.

Fomento Economico Mexicano creates social and economic value in the countries where it is present. It runs different small format stores in Chile, Peru, Mexico, Colombia and Ecuador among which there are drugstores operating under YZA, OXXO stores, Cruz Verde, SanaSana and Maicao beauty shops. Additionally, it operates with over 180,000 employees serving 13 million customers per day.