Analysis: Mexican companies could resort to more spinoffs to enhance market value

MEXICO CITY, Nov 22 (Reuters) – Mexican companies are shelling out sports, gambling and real-estate businesses to recover from depressed stock prices, with other types of businesses likely in the coming months. .

Mexican telecommunications giant America Movil ( AMXL.MX ) began the process late last year after its shareholders approved the divestment of its cell tower business. Conglomerate Alfa (ALFAA.MX) did the same, with investors supporting a plan in July to distribute its stake in subsidiary Axtel (AXTELCPO.MX) to existing Alfa shareholders.

The plan follows a previous failed attempt to sell Axtel immediately.

Then, at the end of last month, the broadcaster Televisa (TLEVISACPO.MX), whose shares have fallen more than 40% so far this year, confirmed plans to end its games and sports, arguing that the move would reduce costs office work.

Some analysts said that Alfa and Televisa could be considering a crisis as they seek to boost their depressed prices. Other companies, such as Coke bottler and retailer Femsa (FEMSAUBD.MX), whose shares are down 3.3% year to date, after gaining 6% in 2021, may follow.

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Such measures have provided some leverage to share prices under pressure from concerns about slowing growth in Mexico although they are far from a panacea. Alfa lost 2.69% the day after its shareholders approved the Axtel spinoff, while Televisa shares rose 0.86% the day after it revealed plans for the move.

Meanwhile, shares of America Movil have risen 13% since September 29, the debut of its tower block Sitios Latinoamerica in the market.

Companies with different business units like Alfa tend to make the index bigger, but that number has changed because of their business model, experts added.

Nymia Almeida, a Moody’s analyst, said in a video interview, “There are often ‘drug’ parts in conglomerates, and spinoffs allow the parts to be separated so that the different cycles of the same company do not go through to harm others.”

‘HOUSE OF BOOKS’

As for Alfa, eight out of nine analysts polled by Reuters predicted that petrochemical subsidiary Alpek could be next in line for a spinoff treatment.

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“Alpek has shown strong results and the spinoff will give it room to breathe, make its own decisions and get the price it deserves,” said Monex analyst Carlos Gonzalez.

Unlike Axtel, whose shares have always outperformed Alfa, Alpek’s stock performance was stronger than that of its parent last year.

Asked about the Alpek spinoff in the future, the company’s spokesperson said that “for now, the focus is on successfully closing the spinoff of our plant with Axtel. The next steps will be explained in their time and later.”

Televisa, meanwhile, could pursue its sports business with its publishing or marketing business, two analysts said. Both said any such move could take a long time.

A Televisa spokesperson declined to comment on future spinoffs.

Other candidates

Bottler FEMSA, whose businesses range from gas stations to convenience stores, may also want to divest one or more of its divisions, according to six analysts interviewed by Reuters.

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Its Solistica logistics business, which has expanded through several recent acquisitions, will be one candidate, four analysts said.

Other candidates include FEMSA’s marquee Oxxo convenience store and its Spin fintech business, which aims to reach 10 million users by 2023.

Still, there is little confidence in Femsa’s next move after a series of recent acquisitions including Swiss kiosk operator Valora. The company may make an announcement about its restructuring plan during the first quarter, analysts said.

“FEMSA can sell small parts such as its bus stations, create special shares, buy back or increase capital for core businesses such as Oxxo to support its operations and market expectations,” Itau who Researcher Alejandro Fuchs said, adding that such a move could start. any decision spinoff.

A representative for FEMSA did not respond to a request for comment.

Declaration of Valentine Hilaire in Mexico City; Editing by Christian Plumb and Matthew Lewis

Our principles: Thomson Reuters Trust Principles.

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