FEMSA completes divestiture of its plastics solutions operations to AMMI, affiliate of Milenio Capital

Rhea-AI Summary

FEMSA (NYSE: FMX) has successfully completed the divestiture of its plastics solutions operations to AMMI, an affiliate of Milenio Capital, for 3,165 million pesos on a cash-free, debt-free basis. The transaction, which was previously announced on October 28, 2024, has now been finalized. AMMI is a diversified that specializes in non-GMO corn production and sustainable plastic packaging.

Positive

• Successful completion of asset sale worth 3,165 million pesos
• Strategic divestment aligned with company's portfolio optimization

Negative

• Loss of revenue stream from plastics solutions operations

Insights

Financial Analyst

The $3,165 million peso (~$185 million USD) divestiture of FEMSA's plastics solutions unit represents a strategic move to streamline operations and focus on core business segments. The transaction aligns with FEMSA's broader portfolio optimization strategy announced in 2022, which included divesting non-core assets. The deal's valuation appears reasonable considering industry multiples and the current market environment. This divestiture strengthens FEMSA's balance sheet and provides additional capital that can be deployed towards its primary growth drivers: retail operations (OXXO), health division and digital initiatives. The timing is opportune as it allows FEMSA to start 2025 with a more focused business model. The transaction's structure as cash-free and debt-free suggests clean execution and minimal post-closing adjustments. While the plastics division wasn't a major revenue contributor, this exit optimizes capital allocation and operational efficiency.

Market Research Analyst

This divestiture reflects broader industry trends where conglomerates are increasingly streamlining their portfolios to enhance shareholder value. AMMI's focus on sustainable plastic packaging positions them as an ideal buyer, potentially offering better growth prospects for the divested operations. The transaction demonstrates FEMSA's commitment to its strategic realignment, prioritizing its retail and digital ecosystem expansion. The Mexican retail market presents significant growth opportunities and this focused approach should allow FEMSA to better capitalize on these prospects. The deal's completion early in 2025 sets a positive tone for potential further strategic initiatives. Market participants should view this as a continuation of FEMSA's transformation from a diversified conglomerate to a more focused retail and digital services powerhouse.

MONTERREY, Mexico, Jan. 03, 2025 (GLOBE NEWSWIRE) -- Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA” or the “Company”) (NYSE: FMX; BMV: FEMSAUBD, FEMSAUB) announced today the successful closing of its previously disclosed divestiture on October 28, 2024, of its plastics solutions operations to AMMI, a leading diversified corporation focused on the production of non-GMO corn and sustainable plastic packaging, an affiliate of Milenio Capital. The transaction amount was $3,165 million pesos, on a cash-free, debt-free basis.

About FEMSA
FEMSA is a company that creates economic and social value through companies and institutions and strives to be the best employer and neighbor to the communities in which it operates. It participates in the retail industry through a Proximity Americas Division operating OXXO, a small-format store chain, and other related retail formats, and Proximity Europe which includes Valora, our European retail unit which operates convenience and foodvenience formats. In the retail industry it also participates though a Health Division, which includes drugstores and related activities and Digital@FEMSA, which includes Spin by OXXO and Spin Premia, among other digital financial services initiatives. In the beverage industry, it participates through Coca-Cola FEMSA, the largest franchise bottler of Coca-Cola products in the world by volume. Across its business units, FEMSA has more than 392,000 employees in 18 countries. FEMSA is a member of the Dow Jones Sustainability MILA Pacific Alliance, the FTSE4Good Emerging Index and the Mexican Stock Exchange Sustainability Index: S&P/BMV Total México ESG, among other indexes that evaluate its sustainability performance.

About AMMI
AMMI, headquartered in USA, is a solid business conglomerate with 59 years of expertise, focused in being the partner of choice for the largest players in the food and beverage industry. The company operates Millfoods, the world’s largest non-GMO corn production plant located in Mexico, with its products reaching 180 countries worldwide through important beer brands, among others. Millfoods also serves the food and animal feed sectors within North America and globally. In Central America and the Caribbean, AMMI leads the production of crown caps and sustainable plastic packaging for the beverage industry through its companies PLIHSA Crown Caps and PLIHSA Plastic Injection, respectively. The holding has a strong focus in sustainability, with the goal of becoming carbon neutral by 2030. Among AMMI’s other companies are PLIHSA Corporate Services and Equity S.A.

FAQ

How much did FEMSA (FMX) sell its plastics solutions operations for?

FEMSA sold its plastics solutions operations to AMMI for 3,165 million pesos on a cash-free, debt-free basis.

When did FEMSA (FMX) complete the sale of its plastics division to AMMI?

FEMSA completed the sale of its plastics solutions operations to AMMI on January 3, 2025.

Who acquired FEMSA's (FMX) plastics solutions operations?

AMMI, an affiliate of Milenio Capital, acquired FEMSA's plastics solutions operations.

What was the timeline between FEMSA's (FMX) announcement and completion of the plastics division sale?

The sale was first announced on October 28, 2024, and completed on January 3, 2025, approximately two months later.