FEMSA Comercio To Buy Majority Stake In Chile's Grupo Socofar For $998 Mln

Mexico-based convenience store chain operator FEMSA Comercio, S.A. de C.V. (FMX) said Friday that it has agreed to acquire a 60 percent stake in Chile-based drugstore operator Grupo Socofar for an enterprise value of $998 million. The acquisition enables FEMSA to expand its drugstore business into South America.

Founded in 1949, Socofar currently operates 643 drugstores and 154 beauty stores throughout Chile under the Cruz Verde and Maicao banners, respectively. It has the leading position among drugstore chains and the number two position among standalone beauty stores in Chile.

In addition, Socofar controls Farmasanitas in Colombia that operates over 150 pharmacies, in-site pharmacies and dispensary units under the Cruz Verde/Farmasanitas banners. For the twelve months ended June 2015, Socofar reported revenues of $1.84 billion.

FEMSA Comercio owns and operates several small-format retail chains including Oxxo convenience stores; Yza, Moderna and Farmacon drugstores; Oxxo Gas service stations and Doña Tota quick service restaurants. The majority of FEMSA Comercio's operations are in Mexico, but it also operates about 40 Oxxo stores in Colombia.

FEMSA Comercio is a business unit of Mexican beverage and retail company FEMSA, which also owns Coca-Cola FEMSA, Latin America's largest Coke bottler.

FEMSA Comercio will fund the acquisition from its cash-on-hand. The current controlling shareholders of the equity of Socofar will remain as owners of the remaining 40 percent of the company's equity. The transaction is expected to close during the fourth quarter of 2015.

FEMSA Comercio said it will exercise day to day operating control, while the current controlling shareholders will appoint two members to the board, including the role of chairman so that they may continue to provide leadership and operating experience to the organization.

Eduardo Padilla, FEMSA Comercio's CEO, said, "We have learned much about the drugstore industry in Mexico in recent years, and Socofar will greatly enhance our knowledge base and it will put us in a position to pursue significant growth beyond our borders in the years to come."

FMX is trading at $91.59, up $1.47 or 1.63 percent on a volume of 72,025 shares.

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