BradyIFS and Envoy Solutions come together to create a compelling new platform
August 29 2023 - 3:25PM
BradyIFS and Envoy Solutions come together to create a compelling
new platform
Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA” or the
“Company”) (NYSE: FMX; BMV: FEMSAUBD, FEMSAUB) announced today that
it has entered into definitive agreements with BradyIFS to create a
new platform within the facility care, foodservice disposables, and
packaging distribution industries in the United States. The
combined platform will bring together Envoy Solutions LLC and
BradyIFS in a highly complementary combination, positioned to serve
and provide value to its customers and suppliers effectively and
efficiently across the country.
Transaction Highlights
- Upon closing, FEMSA will receive
approximately US$1.7 billion in cash and retain an ownership stake
of approximately 37% in the combined entity, which is expected to
have pro-forma revenues approaching US$5 billion.
- For the purposes of this
transaction, the Envoy Solutions valuation implies an unlevered
double-digit annualized rate of return on the accumulated capital
invested by FEMSA since entering this business in 2020.
- Approximately 63% of the combined
entity will be owned by existing BradyIFS equity holders led by
Kelso & Company and its affiliate funds and including BradyIFS
management; by funds managed by Warburg Pincus LLC; and by the
current minority shareholders of Envoy Solutions.
Transaction Rationale
- The transaction will allow Envoy
Solutions and BradyIFS to combine their strengths and complementary
footprints to create a strong customer-focused platform to
effectively provide its customers with high-value solutions, and
its supplier partners with excellent market reach, delivering more
products and solutions in more locations across the United
States.
FEMSA Forward
and Strategic Update
- This transaction allows the Company
to implement FEMSA Forward with regards to Envoy Solutions while
maximizing shareholder value, within a reasonable timeframe.
Reaching this milestone was made possible by the tireless effort of
the Envoy Solutions team. FEMSA will aim to contribute to the
governance and continued value creation at the combined entity,
mainly through FEMSA’s participation on the Board of Directors.
FEMSA does not expect to contribute incremental capital to the
combined entity going forward.
- With this announcement, FEMSA has
now addressed a major portion of the divestiture plans outlined in
the FEMSA Forward strategy. Our focus will remain on the continued
execution of the Company’s long-range plans in retail, beverages
and digital, which will include a combination of organic growth and
inorganic investments within these core verticals, as well as other
capital allocation actions that pursue the maximization of
long-term intrinsic value per share, with a balanced combination of
yield and growth. The Company will share more details of this
strategy in the months to come.
The transaction announced today is subject to
customary regulatory approvals and is expected to close in the
coming months.
About KelsoKelso is one of the
oldest and most established firms specializing in private equity
investing. Since 1980, Kelso has raised a total of 11 private
equity funds and invested approximately $19 billion of equity
capital in more than 140 companies. Kelso was founded by the
inventor of the Employee Stock Ownership Plan (ESOP) and, as a
result, the principles of partnership and alignment of interest
serve as the foundation of the firm's investment philosophy. Kelso
benefits from a successful investment track record, deep sector
expertise, a long-tenured investing team, and a reputation as a
preferred partner to management teams and corporates. Kelso has
significant experience investing in distribution/packaging, having
deployed approximately $1.4 billion of equity capital in the sector
since 2015. For more information, please visit www.kelso.com.
About Warburg PincusWarburg
Pincus LLC is a leading global growth investor. The firm has more
than $83 billion in assets under management. The firm’s active
portfolio of more than 250 companies is highly diversified by
stage, sector, and geography. Warburg Pincus is an experienced
partner to management teams seeking to build durable companies with
sustainable value. Founded in 1966, Warburg Pincus has raised 21
private equity and 2 real estate funds, which have invested more
than $112 billion in over 1,000 companies in more than 40
countries. Warburg Pincus is an active investor in industrials,
with current and historical investments including, Consolidated
Precision Products, Duravant, El Carwash, Extant Aerospace,
Infinite Electronics, Pregis, Service Logic, Sundyne, TransDigm,
TriMark USA, Wencor, among others. The firm is headquartered in New
York with offices in Amsterdam, Beijing, Berlin, Hong Kong,
Houston, London, Luxembourg, Mumbai, Mauritius, San Francisco, São
Paulo, Shanghai, and Singapore. For more information please
visit www.warburgpincus.com. Follow us on LinkedIn.
About FEMSAFEMSA 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. FEMSA also
participates in the logistics and distribution industry through its
Strategic Business Unit, which additionally provides point-of-sale
refrigeration and plastic solutions to its business units and
third-party clients. Across its business units, FEMSA has more than
350,000 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.
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