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Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, is focused on its Forward Strategy, which emphasizes the long-term value creation of its core businesses. FEMSA's capital allocation strategy revolves around key principles aimed at maximizing shareholder value while maintaining prudent financial management.
In the latest move, the company entered into an accelerated share repurchase (ASR) agreement with a financial organization in the United States to buy back its shares via the acquisition of American Depositary Shares (ADS).
According to the conditions of the ASR agreement, FEMSA will repurchase a total amount of $250 million of its ADS1 from the financial institution. The ASR looks to make an initial delivery of 483,559 ADSs on May 20, 2025.
FEMSA’s latest action syncs well with its capital-allocation approach and commitment to maximize shareholders' returns. Per the ASR agreement, the total number of repurchased shares will be based on the daily volume-weighted average price of the company’s ADS within the term of the agreement, less a discount. The ASR agreement’s final settlement is likely to be done by third-quarter 2025.
Additionally, FEMSA intends to return capital to shareholders as a crucial aspect of its overall strategy, following the successful completion of divestments related to FEMSA Forward and considering expected capital needs.
What’s More to Know About FEMSA?
FEMSA’s shares have gained 1.8% against the industry’s 1.2% decline in the past year. This Zacks Rank #4 (Sell) company has been witnessing a soft consumer environment. It faces rising operating expenses, due to a combination of inflationary pressures, supply-chain disruptions and higher labor costs. These challenges have affected multiple business segments, with the Health Division in Mexico particularly struggling due to increased costs and intensified competition.
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Nevertheless, FEMSA is progressing on its FEMSA Forward Strategy to drive value in its core businesses, Retail (including the Health Division), Coca-Cola FEMSA and Digital@FEMSA. The strategy also includes exploring alternatives for its strategic business, including potential divestments. OXXO Mexico remains a key pillar of FEMSA's retail operations, driven by its ongoing efforts to refine and expand its value proposition while growing its footprint and scale to better serve customers.
FEMSA’s Proximity and Health retail businesses offer significant opportunities for long-term growth and value creation. The company is on track to accelerate earnings growth in its retail division through organic expansion and by continually enhancing the value it provides to consumers across various formats and markets.