Dive Brief:
- Delek US Holdings has agreed to sell its retail business — which includes 249 convenience stores mainly in the Southwest — to a subsidiary of FEMSA, the owner of Latin American c-store giant Oxxo, for $385 million, according to a Thursday announcement from Delek.
- The stores are located across Texas, Arkansas and New Mexico, according to a separate announcement from FEMSA. Almost every location operates a gas station under Delek’s DK and Alon fuel brands.
- Once the deal closes — which is expected to happen by the end of 2024 — FEMSA will have taken its first steps in the U.S., a goal that has been in the works since early last year.
Dive Insight:
Acquiring Brentwood, Tennessee-based Delek’s 249 c-stores is a significant move that will introduce a new major player to the U.S. c-store landscape. In its separate announcement, FEMSA said the U.S. market “offers high strategic fit, and presents an opportunity to build a platform that, over time, has the potential to achieve scale and create shareholder value.”
FEMSA also noted that Delek’s stores have the right set of attributes to spark its launch in the U.S., including size, geographical footprint and “possibilities for extensive experimentation, testing, and fine-tuning” its convenience value proposition.
“We have been building and expanding our retail operation in Mexico for over 45 years, eventually reaching ten other countries in South America and Europe, and a store base of more than 30,000 locations,” José Antonio Fernández Garza-Lagüera, CEO of FEMSA’s retail operations, said in Thursday’s announcement. “As we welcome our new DK colleagues into the FEMSA family, we are excited to embark on this new and important journey together.”
It’s unclear if FEMSA will rebrand Delek’s c-stores to its popular Oxxo brand, which has over 22,800 stores in five countries, including Mexico, Colombia, Chile, Peru and Brazil. However, in Thursday’s announcement, Avigal Soreq, president and CEO of Delek, said the deal “creates an exciting opportunity for Delek US Retail and its employees as they become part of FEMSA’s growth strategy in the United States.”
Monterrey, Mexico-based FEMSA revealed its goal to enter the U.S. in February 2023 upon divesting its stake in Dutch beer company Heineken. At the time, the company said it was exploring the “proximity retail space in the U.S.” as part of its strategy focused on retail, beverages and digital.
Delek’s leadership hasn’t been shy over the past year and a half about its intentions to sell its convenience store business. In March 2023, Soreq said the company was “evaluating various options and opportunities around logistics and retail” as it looked to unlock shareholder value.
“Our belief in retail is either you can go big all the way or you’re almost not relevant,” Soreq told shareholders at the time. “And we hope — and we are certain — that you will be very proud and happy with the deal that we are going to end up showing you.”
Soreq also said the deal allows Delek to “gain a competitive partner for ongoing and expanded retail fuel sales.”
“The sale of Delek US Retail to FEMSA is an incremental step in our commitment to unlock the sum of the parts value inherent in our system,” Soreq said. “We are pleased with this transaction and expect to execute on additional steps to unlock value for our stakeholders.”
