Fomento Económico Mexicano SAV de CV will pick up a minority stake in Jetro Restaurant Depot to create a joint venture that will take the U.S. cash-and-carry retailer's business model to Mexico and other Latin American markets.
The companies entered into a non-binding memorandum of agreement on Sept. 26. The Mexican retailer and soft-drinks bottler plans to invest $750 million in Jetro.
FEMSA, which bottles Coca-Cola Co.-branded beverages, said the transaction fits well with its strategic plan to spend on growth opportunities that can leverage its capabilities across different markets while providing the opportunity for risk-adjusted returns.
Privately held Jetro operates as a wholesale business-to-business cash and carry retail foodservice provider with over 130 stores in the U.S. with two formats: Jetro Cash and Carry and Restaurant Depot. The business was founded in 1976.
The parties expect to sign definitive agreements in October to formalize the MOU. The deal will then be subject to customary regulatory approvals and is expected to close in the fourth quarter.
The move comes as FEMSA ramps up investments in its retail segment. In August, FEMSA agreed to buy 50% of Brazil's Raízen Combustíveis SA to gain entry into the country's convenience store industry. Earlier in September, FEMSA Chairman Jose Antonio Fernandez Carbajal reportedly told local newspapers El Universal and El Financiero that the company will spend 61.88 billion Mexican pesos in Mexico through 2021, adding about 41,000 jobs.
FEMSA operates 17,999 Oxxo convenience stores across Mexico, Chile, Colombia and Peru, according to the group's website.
As of Sept. 26, US$1 was equivalent to 19.64 Mexican pesos.
