Ladies and gentlemen, welcome to the conference call of FEMSA and Valora's Transformational Alliance in the European Convenience Retail and Food Service Space. I am Sandra, the call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. You can ask your questions by pressing star one on your telephone. Webcast viewers may submit their questions in writing via the relevant field. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Daniel Rodríguez, CEO of FEMSA. Please go ahead, sir. Thank you very much. Good morning, and good afternoon to everyone. Welcome to today's joint FEMSA and Valora conference, together with Salvador Alfaro, CFO of FEMSA Proximity Division, Juan Fonseca, Head of Investor Relations, and our colleagues from Valora, Michael Müller, CEO of Valora, and Beat Fellmann, CFO of Valora. I'm very pleased to be able to present to you the rationale and advantages of this transaction. Together, we intend to become the European market leader in convenience stores and food service. Allow me now to explain the details of the transaction. Next one, please. Okay. As you know, we have announced our intention to launch a tender offer to purchase all of Valora's listed shares at a price of CHF 260 per share, which is 57% higher than the average price during the past 60 days and 52% higher than yesterday's closing price. Mr. Peter Ditsch, Valora's major shareholder, has agreed to terms of the offer and has committed to tender all of his shares into the offer. Valora's board has received a fairness opinion and unanimously recommend shareholders to accept the tender offer as well. The prospectus will be published on or around July 20, 2022. The total cash consideration for Valora shareholder is CHF 1,139 million, and FEMSA will assume Valora's net debt of CHF 222 million. FEMSA will fund the transaction with our outstanding cash balance. Considering Valora's 2021 financial adjusted for IFRS 16, the implied multiple of enterprise value to EBITDA is 9.4x. Now, let's please move to the next slide. Let's take a look at FEMSA at a glance. As many are aware, FEMSA was founded as a brewery in the north of Mexico in 1890. In 1978, we opened the first OXXO store. Since then, we have grown to more than 25,000 points of sale, most of which are OXXO convenience stores, but also including other formats and banners. In recent years, we have often been able to add more than 1,000 stores per year. Along the way, we also became the largest bottler of the global Coca-Cola system measured by volume, as well as an important shareholder of Heineken when we exchanged our beer business for a large stake in that company in 2010. We have developed several other businesses that grow our particular capability set. During the latest fiscal year, FEMSA's revenue were just about $27 billion. Next one. While Mexico is our home market, FEMSA has become a company of the Americas, and the transaction announced today would significantly move us toward becoming a more global platform. Today, over more than 320,000 colleagues create value across 13 countries, and as a result, we believe more than a million people rely on FEMSA for their income. That is a responsibility we take very seriously. At FEMSA, we strive to generate economic and social value through our companies and institutions with three core aspirations, improving the communities we serve, focusing on our people, and representing a positive force in our society through sustainable business activities with a high social impact. Next one, please. Focusing now on our retail operations, you can see that they represent more than half of FEMSA's consolidated revenue. Within retail, Proximity is by itself the largest contributor to our revenues, with 43% of the total. Our Proximity Division includes OXXO, our main convenience banner with more than 20,000 locations in five countries, as well as our petrol station network and other smaller brands. Among other advantages, our large scale has enabled us to become an important participant in financial services for the Mexican consumer. More recently, we have launched digital platforms that are off to a promising start. In addition to Proximity, our retail operations include our Health Division with more than 3,600 pharmacies in four countries, in addition to other health-related activities. With the transaction announced today, Valora will become an integral part of our Proximity Division, the nucleus of our European retail operations, and the foundation of our ambitious growth strategy in the continent. Now let me turn it over to Michael. Thank you very much, Daniel. Also warm welcome from my side. I turn to page 11. Valora is a foodvenience leader in the heart of Europe. We operate in predominantly German-speaking Europe, but also in Luxembourg and the Netherlands. Roughly 2,700 stores we generated in 2021 in a year that has been significantly affected by the pandemic and the consequences on our store network, external. CHF 0.2 billion and the EBITDA of CHF 95.5 million. In our network, roughly 15,000 people work in our stores and in the multiple offices in the support functions. We generate roughly 68% of our group GP gross profit from what we call "foodvenience" categories that are all the typical product categories that you expect in a convenience store, excluding the tobacco and print media categories. In terms of external sales breakdown, we generate roughly half of our sales in Switzerland and the other half in Germany. Again, that's a number that is affected mostly by reduced food sales in Germany in 2021. By segment, we separate our retail activity, which is mostly convenience retail and what we call food services, which is the offerings of takeaway on-the-go food in these markets. On top of the store network that we operate, we are also in the bakery field, vertically integrated. We are one of the leading pretzel producers globally with roughly 730 million pieces produced last year in three industrial bakery plants, two of them in Germany and one of them in Cincinnati in the U.S. I turn to page 12. Valora is a company, it's that its history starts in 1905. It's also a company that is more than 100 years old. I will not go through all the details of the first decades. I will focus on the transformation that, Valora underwent over the last roughly 10 years. We decided to focus our activities, our business activities 10 years ago on what we call "foodvenience". The convenience offerings on-the-go consumption with a strong focus on food offerings. The journey started with an acquisition of Ditsch, Brezelkönig, two very well-known brands in the German and Swiss market, and continued with further acquisitions of Pretzel Baron, our Cincinnati manufacturing plant. BackWerk, a successful, bakery-based or sandwich-based, format in Germany, and most recently with Back-Factory and, Frittenwerk. All these transactions were a result of a strong network in the, European convenience and food service landscape, and all these acquisitions have been self-sourced and have been, bilateral negotiated. On the retail side, we also strengthened our footprint significantly over that time by entering the German market with three transactions very early on of the journey and consolidating the market in Switzerland through the acquisition of Naville. On top of that, we have not only acquired multiple companies and formats, but we also developed our core business organically, quite successfully, both in terms of refurbishment of existing TOFs, organic expansion in existing markets. Most recently we announced significant transactions with Mobility, 39 stores and Oel-Pool, 71 stores, which is basically the entering and the strengthening of our gas stations operation in Switzerland. Oel-Pool, the second transaction, reflects the BP, British Petroleum store network here in Switzerland. We've been also actively developing our digital, activities mostly around automated stores and 24/7 offerings for our consumers. Turn to page 13. The way the company is set up, it's a multi-format, multi-brand and multi-geography platform where we operate in the retail space, leading brands like avec, ServiceStore, U-Store, k kiosk, cigo, and TP with roughly 2,000 stores. On the food service side, again, BackWerk, Brezelkönig, Ditsch, Caffè Spettacolo, SuperGuud, all brands that are highly recognized, have a leading position in the respective markets. Our store portfolio is very much centered around transportation hub. Roughly 50% of our stores are located at transportation hubs. That was also the reason, obviously, why the pandemic impacted our business quite severely. In the most recent years, we expanded the store network also in city center locations as mentioned, more and more in gas stations. However, on the gas station, we focus on store operations exclusively, so we do not rely on ultimately the food, fuel sales in these locations. On top of that, I mentioned digital initiatives. We're quite proud that we're in the European market, very well-recognized for our automated 24/7 solution with avec box, and most recently we expanded also in vending machines. I mentioned the B2B production expansion, a business that grew double-digit over the last couple of years, specifically during the pandemic. Our U.S. operations that we started roughly four years ago yield a quite success, grew rapidly, and we are very pleased also with the results. This for us contributed in terms of geographic expansion of our B2B business activity. I turn to page number 15. The way we see it, Valora and FEMSA, it's a perfect fit to reinforce and accelerate Valora's growth strategy that was well laid out already on a standalone basis. Now in combination with FEMSA, will be accelerated quite significantly, or we expect to accelerate it quite significantly. Along our strategic pillars of growth, efficiency, innovation, culture, and sustainability, we see significant benefits for both sides. In terms of growth, we are the privilege that we will be in the future part of the FEMSA group can benefit from their expansion capabilities, their track record to integrate successfully companies that have been acquired and help them to expand beyond the existing business. In terms of efficiency, I think quite clearly it's not a transaction-focused operations here in Europe. The scale that we achieve, definitely on the Valora side will be significant, and we expect quite some benefits coming from that. In terms of innovation, we expect that the digital capabilities that we combine on both sides will help us to even further improve the customer experience in all our stores on the Valora side, but potentially also on the FEMSA side by combining and joining forces on that side. In terms of culture, the way we started to establish this collaboration and this alliance, it's based on trust and a high level of respect for both long track records, both companies have more than one hundred year, and a high level of entrepreneurial thinking and value-oriented management. Ultimately, also on the sustainability side, an element that we take very seriously, both on the Valora and FEMSA side, we see significant benefits. On page 16, just to summarize, FEMSA and Valora, we're convinced, has to become each other's lever to further accelerate the European market expansion. It will build that strategy on the strong Swiss heritage we have here with the headquarters here in Switzerland. We will accelerate our strategic plan to expand our existing business beyond its current borders. For FEMSA, it offers a unique opportunity to enter the European market on the basis of the Valora platform. I mentioned the synergies of the mutual focus on innovation and digitalization. I'm personally very much convinced that this will be of significant values for both entities and with that, I see it as a combination of the best of both worlds. The combination that increases scale and concept know-how, and convenience capabilities on both sides, but specifically also on Valora's side to the benefit of FEMSA. We see it as a unique opportunity also for our employees to benefit from the broadening of their career opportunities as part of that growth plan that we laid out and to operate within Valora Group. With that, I hand over to Daniel. Thank you very much, Michael. Next slide. Okay. Well, for us in FEMSA, Valora is very aligned with our strategic priorities, fitting well with our long-term value creation pathway. By leveraging the capabilities of both companies, we will be in a position to drive growth and remain at the cutting edge of the modern convenience retail. Valora is a best-in-class operator with multi-country and multi-format expertise and an experienced and talented management team. Together, we will be able to accelerate Valora's strategic plan, capture cross-fertilization opportunities, and pursue significant organic and non-organic growth. Next one. This slide contains and reinforces several important messages for Valora's various stakeholders. First of all, FEMSA will operate Valora as a separate business and as our European retail affiliate within the Proximity Division. Valora's renowned concepts will continue to thrive under their current brands, and Valora's headquarters will remain in Switzerland. Valora's executive and leadership teams will continue to drive the business and accelerate the European expansion, supported by a capable advisory board. Finally, we have a strong commitment to all of Valora stakeholders, including, of course, the employees as well as suppliers and partners. With that, let me turn it over to Salvador Alfaro. Thank you, Daniel. Let me take advantage of the last three slides to recap on some of the key items and points that Michael and Daniel already talked about. First, on the transaction details. It's an all-cash public tender offer from FEMSA to acquire all of the shares of Valora Holding. This is a transaction that's gonna be fully financed by cash on hand on FEMSA's balance sheet. We already have the support from Peter Ditsch, the major shareholder of Valora, who owns close to 17% of the shares in the company. Our intent is to delist Valora from the SIX Swiss Exchange after the tender offer. In terms of the offer price, the offer price is CHF 260 per share. It's a highly attractive premium to Valora's yesterday close, 52%, and also versus the last sixty days volume weighted average, 57.3%. In terms of multiples, this represents a 9.4x multiple of enterprise value to EBITDA after IFRS 16 accounting, and there is a fairness opinion issued by the IFBC in the price that is being offered. The offering is subject to the satisfaction of customary conditions and acceptances, including a two-thirds number of shares to be acquired from Valora in the process. In terms of offer period, we are expecting to issue the prospectus on July 20th, and the planned offer period is from August 5th to September 2nd. The Valora board has unanimously recommended the acceptance of FEMSA's offer. In terms of the equity story, if you go to the slide number 22. We believe this is a perfect match to jointly pursue the "food venience" leadership in Europe. We think that the value proposition is uniquely positioned to gain in the current mega trends of mobility and on-the-go consumption. We think that these are two businesses that are at scale, strong operators with deep know-how that can certainly nurture cross-fertilization in both sides. We believe that the opportunities both organic in the current markets and also inorganic in different markets in Europe are there to be captured by this strategic alliance. Finally, the teams are very talented and professional in both Valora and FEMSA, and we believe that there's going to be career opportunities as well, as Michael mentioned. Finally, this is an attractive proposition, a win-win proposition for both shareholders. For Valora, it's an attractive premium, as we already mentioned. For FEMSA shareholders, it's a unique way to enter a developed market such as Europe. Finally, just to go over the key dates, the announcement is going today. The publication of the prospectus is going to be on July 20th. Offer period, as I mentioned, from August to September 2nd. There's potentially an additional acceptance period running through the end of September. Settlement will be expected by the end of September, early October. With that, let me open it up for questions from the call. Thank you, Salvador. And operator, c an you help us with the questions, please? We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to only answer while asking a question. Webcast viewers may submit their questions in writing via the relevant field. Anyone with a question may press star and one at this time. The first question comes from Benjamin Theurer from Barclays. Please go ahead. Good morning and good afternoon, everyone. First of all, congrats on the transaction. Now, I get it's clear that actually Valora is gonna keep basically the strategy enhanced on growing the business and together with FEMSA in Europe. Can you elaborate a little bit on how the financing is gonna work? How FEMSA is actually going to allocate capital to the Valora business as needed? And how much do you think you can take from some of the expertise from Valora back to FEMSA and some of the expertise from FEMSA over to Valora to create incremental shareholder value? Thank you very much. Yeah. Thank you very much for the question. I mean, let me start first with the financial. I mean, definitely, we strongly believe that our legacy business have robust cash generation profiles that will allow them to continue growing, I mean, in line with our expectations. Definitely, I mean, if we see that for any particular reason, we need to allocate more cash to Valora, particularly I'm referring to non-organic acquisition, well, we know that we have some optionalities like the Heineken shares. As we have done in the past, we always will continue, I mean, comparing our investment in all the businesses. If we perceive that Valora with a potential acquisition will create more value, well, then we will consider, I mean, financing through different options that we have at FEMSA. Now, in terms of the value creation or what we can bring from FEMSA to Valora and what Valora can contribute to us, I mean, definitely I think that we can bring our balance sheet. First element. Second, we know that there are nice opportunities in terms of organic growth in the markets that Valora is operating today. I think that is something that we have a proven track record in Mexico and in Latin America, where we normally open more than 1,000 stores per year. I think that definitely is an area where we can contribute to Valora. From the other side, I mean, Valora, I mean, is a very strong operator, I mean working with multi-banners, but also more importantly, I mean, all what is prepared food. I mean, as you know, we have I mean a nice business in Mexico, but I think that we have a lot of opportunities to learn from Valora in terms of the "foodvenience" platform, and bring that experience also into Mexico and into the other countries in South America. I don't know, Michael, I mean, if you have any comments from your end, from Valora. Maybe what I can add, obviously as I mentioned, we also have a very value-oriented way to deploy capital. We're very much focused on deploying capital with a strong focus on return on capital employed. The threshold that we typically see in our business is that we deploy capital north of 15% return on capital employed, excluding goodwill on organic basis. We have a network that offers these kind of opportunities to further deploy capital at that level. As Daniel mentioned, I see a number of what you typically call soft synergies, but over time they'll turn into hard synergies, starting with what we discussed, I mentioned regarding digital and innovation, where both companies invest in solutions for customers, and ultimately, these resources can be combined and capital that is allocated to these initiatives can generate high value. Thank you very much, Michael. Okay. The next question comes from Robert Ford from Bank of America. Please go ahead. Hey, good morning, everybody, and thanks for taking my question. Daniel, you touched on accelerating European market development. Can you maybe balance how you're thinking about raising densities versus moving into new markets that may not be German-speaking or Germanic? Then, you know, Valora was franchising, you know, how are you thinking about franchising? You know, based on this last comment, should we be prepared for much lower IRR hurdles at Valora versus what we see in the Mexican or Brazilian operations, for example? Then with this continuous mention of digital capabilities, both in the press release and in the last comment, you know, where is Valora in terms of digital and how does that add value more, maybe explicitly to FEMSA? Thank you. Okay. Thank you, Bob. I mean, first of all, I mean, as you know, and we have made that very clear, we, I mean, as part of our study, we are trying to diversify our portfolio in the core businesses. That is why, I mean, over the last couple of years, we were looking for opportunities in the Proximity business and in mature markets. Definitely, what we like very much from Valora is that, I mean, it's a great operator. I mean, he has proven track record, I mean, in terms of operating multi-banner and also multi-country. The way that we see is that most probably we will continue growing in the current markets that Valora is in, mainly through organic growth. Obviously, I mean, as they have done very successfully, if there are nice opportunities in the current market in terms of non-organic acquisition, we will analyze them. On top of that, I mean, if there are also good opportunities in other markets in Europe, we will also consider. Now, having said that, I mean, in terms of your question regarding return, well definitely, I mean, the returns that we will get in the mature markets are different from the ones that we are getting in Latin America. I mean, we are adjusting that by risk. We feel very comfortable that combination of having, I mean, businesses in our core operations, both in developed markets, we will continue to grow in Latin America, definitely. That is the case with Brazil. Also, I mean, having good business and strong business in mature markets is something that we really would like to pursue. Then let me turn over to Michael, I mean, because there was a question regarding the digital ecosystem in Valora. Valora is perceived as one of the leaders in our industry as it comes to digital solutions across the board. Our main focus is with our digital initiatives to support the core business. We have not ventured in any digitalization businesses, but we focused on strengthening the core business. Probably the most notable initiative is our automated 24/7 store operations, where I think key is not only to master the technology side of these stores, but rather the operational side. Since we introduced these stores very early to our markets, we learned quite early on how to operate and how to maximize the customer journey and the experience in these automated stores. Finally- Michael, how do the... ... I would like to add that. Sorry, in terms of the synergies, I see more synergies, particularly in the digital space, I mean in terms of the knowledge sharing. I mean, Valora also has a fintech. I mean, as you know, we launched our fintech last year. I think that we all are very clear the value of data. I mean, how we can leverage that tool in both geographies, so in Latin America, but also in Europe. Ah, that makes sense. Thank you. Just one follow-up if I could please. That is, you know, how do you think about or how should we think about returns in fully automated stores or vending compared to what you see in your physical or your human operated locations? The way we look at it's mostly an expansion of opening hours, so you're probably aware that in our markets you typically have restrictions on opening hours. By having the capability to open and provide consumers access on a 24/7 basis to these stores, and these can be either dedicated new what we call the avec box. A separate store that operates exclusively on an automated basis. Even more importantly, these are retrofitted stores. We deploy this technology to existing stores, and by doing that, we extend opening hours and obviously improve, by doing this, the economics of these stores by just generating on the same footprint with the marginal incremental investment, additional sales and margin. Thank you. The next question comes from Carlos Laboy from HSBC. Please go ahead. Yes, good morning, everyone. For Valora, just a quick question on what your ROIC is including goodwill and for FEMSA. Daniel, you've spoken before about the big NAV discount. I guess the question is it your intention to continue to do M&A deals, you know, in the interim while this issue of how you're gonna fix the NAV discount is addressed? If you wanna, we'll start with the second part of your question, and then we will come back to the Valora's team, Carlos. I mean, definitely, our intention is to continue growing organically, and that applies for all the geographies. I mean, both in Latin America, but also we see that there are nice opportunities in Europe. Then on top of that, obviously, I mean, if there are M&A opportunities, we will consider them. But we will keep the same discipline as has been the case in the past for Valora and also for us in FEMSA, in order to make sure that we can create value. Then the second part of your question, which is more around the conglomerate discount. As we mentioned during the last results call that we had, I mean, a couple of months ago. I mean, we are running an, I mean, a process and exercise as we speak, in order that we can come with a proposal to be discussed with our board during the second part of the year. At this stage, there is nothing that I can anticipate, Carlos, but the only comment that I can make is that we are working on that. We are conscious of the impact that it has on the price of our shares. We hope we can come with a, I mean, a good solution. We are considering all the alternatives in order to make sure that we can come up with a, I mean, sensible, if you want, alternative to be presented to our board in the second part of the year. With that, I would like to pass on to Michael. Thank you very much. First of all, you asked for ROIC, including goodwill. We report return on capital employed. I probably refer to our annual report in terms of the specific definitions and the differences, how we report. We include, for example, on the group level also, our cash, but I don't wanna go into all the details. Secondly, importantly, if you look at the 2021 results, they have been significantly affected by the pandemic. We reported on a 2021 basis, CHF 30.3 million in EBIT. In the previous three year, we were operating at the level of pre-COVID, at rather a level of CHF 90 million. You would have to adjust for that, but significantly, the number you find in our annual report 2021 on page 160 without goodwill, our return on capital employed is 6.2% for the group with quite significant differences between the different divisions. If you look at retail Switzerland, even during the pandemic year 2021 without goodwill, it was at 24.8%. In retail Germany, which is a business that has a higher share of franchises, 27.3%. The retail division overall, 26%. The food service division, which includes also our B2B production activities, which come at a higher capital intensity. It's 2.7% in 2021. This number is obviously the most affected by the pandemic since you saw a significant drop in food sales. High frequency locations like the transportation hubs, where most of our business is located, especially in the food service division. Thank you. As a reminder, if you wish to register for a question, please press star and one. The next question comes from Marcella Recchia from Credit Suisse. Please go ahead. Hi. Thank you for taking my question. I have a question here. Basically management is dealing with three big projects simultaneously, right? The consolidation of the distribution platform in the U.S., the development and the rollout of Steam, and now the expansion to the European market. My question is, what is the priority here, and how management is going to conciliate the time allocation within these projects going forward? Thank you. Yeah, thank you very much for your question. I mean, as we mentioned during the presentation, definitely in the case of Valora, we will operate Valora as a separate business, and its European retail affiliate within the Proximity Division. The intention is that, I mean, Michael, who is the CEO of Valora, will continue to be responsible for the business in Europe, I mean, for that part of our business going forward. On top of that, the intention that even though that, I mean, the performance will be reported in the Proximity Division, we will run this part of the geography with an advisory board. We will have board members from FEMSA, and we will also get external board members in order that they can help us to contribute in the growth of the business. We feel very comfortable that that will have not a negative impact on the other opportunities that we are pursuing in other part of the world. Let me give you just one example, because in the case of the specialized distribution business in North America, I mean, this is run by the local team in North America. We only have a few, I mean, Mexican team members that joined that group. Our intention also here in Europe is that, as I said, we would like to run the business with a very strong and solid management team, and obviously with the whole team based here in Europe. Yeah. I would just add. Hey, Marcella, this is Juan. Hey, Juan. I mean, of the three that you mentioned, as Daniel is saying, I think Envoy Solutions, the U.S. business, is a good proxy. It is a good example of a business that is run by the local team with very with a board and with, you know, little distraction in terms of what happens in Monterrey. Probably of the three that you mentioned, digital is the one that is completely housed in Monterrey and probably occupies more of the senior leadership team's time. Of course, you did not mention it, but, you know, Salvador and the Proximity team have 20,000 stores to run in Mexico and, you know, 1,000 new stores to open. You know, the businesses are very robust. I would not think of distraction in terms of management time, but also in terms of capital. I mean, we are able to really tend to all the business units and all the growth initiatives. This is not, you know, it's not pushing the envelope. We are very comfortable with. You know, it's also where the beauty of the structure comes in, where Valora comes with the very strong management team, so we don't really have to worry too much about that. Perfect. If I may just add another question here very quickly. I don't know if you can comment about that. Is there any rationale behind the 50% premium paid over last price last close of Valora? Yeah. Well, I mean, as you know, both companies, we have been around here for more than 100 years. The way that we have analyzed from our end the business is based on the long-term view of where we can, I mean, how much value we can create with Valora. That's the way that we made the proposal in terms of the price to Valora. To be honest, I mean, the fact that this is a publicly listed company, I mean, they also run a fairness opinion, and the fairness opinion reflect that this is the, I mean, it's a reasonable market price for us to pay for Valora. Right. Thank you very much, gentlemen. Thank you. The next question comes from Sergio Matsumoto from Citigroup. Please go ahead. Yes, good morning. It's Sergio Matsumoto from Citigroup. Thank you for taking my question. I wanted to ask more details on the franchise nature of the business at Valora. If I remember one of the slides, it says that there's a 77% franchisees, and that was up from something about, like, maybe 11% franchisees. Can you explain what led to that increase? Perhaps there's something specific to the European market in terms of strategy or being capital efficient that led you to that increase? How are the franchisees' track record of opening new stores, you know, from, you know, up from the first one they opened? Are they usually operate one banner or multi-banner? Do you have any presence of large franchises that have perhaps you know, like a large share of your stores? Lastly, how many years are the franchisee contracts? Thank you. Thank you very much for that question. First of all, the reason why the number moved from 11%-77%, this was a strategic decision. We decided that we're gonna change the operating model, a little over 10 years ago. Now, what we call franchise is a soft version of a franchise system, meaning we hold the lease agreements of all the stores. We typically, with very few exceptions related to the BackWerk format, we invest in the store, so we own the outfitting of the store, the equipment in the store, and we also quite a significant part of the store, we even finance the inventory. The question could be, why do you call it franchise, since this doesn't sound like a very capitalized model. What we call franchise is entrepreneurial way or an entrepreneurial incentive for the people who run these stores. They have flexibility in terms of running the stores on their own books. They have all the entrepreneurial incentives to spend more time themselves in the stores to ultimately improve sales, and that's the main reason for this operating model. It's not a strategic decision that has been taken on the basis to reduce ultimately balance sheet exposure to the stores. That's important to understand. That also explains the rest of my answer. First of all, we typically do not have investor type of franchise partners. These are people who own one store, run one store. At times, they run two to three, four stores, and typically only one format. We do not have any dependencies on large investors in our franchise system. There are a number of franchise partners who are very successful partners we like a lot. At times, even around five, six, seven large stores, but typically limited to a region. We don't have any dependencies on large partners that ultimately could anyway try to renegotiate any agreements they have with us. In terms of the typical franchise agreement, we have multiple different agreements so. The simple answer is basically we renew these contracts on a regular basis. Since we hold the lease agreement, we are pretty much in control of these store operations despite we have entrepreneurs running these stores. Maybe one thing to add, it's important that you notice that the revenue [inaudible] is based on franchise accounting. If you really wanna assess the strongness of our network, then you have to read the line external sales. I think that's important. Thank you. Thank you very much. Just maybe a follow-up here. These franchisees, do they normally come up as a, you know, like they used to be employee and then they become eligible to buy into a franchisees or do they, you know, they kind of, you know, come from externally and to buy into these stores? You know, how does the development process normally happen? We see both. Especially in the early days when we started to change the strategy in terms of operating model, we handed over quite a few stores of our own stores to former employees. Now, since this transformation comes to an end, we're already at 77%, as of last year. Obviously, since we are growing store count and we have changes in our franchise partner base, we predominantly recruit franchise partners externally. All our formats are recognized in the market as being highly attractive opportunities for people who are interested to run their own stores, be it in Switzerland, be it in Germany, under the different models that I mentioned. Specifically, you'll find in our documentation also the word agency. Some of the formats are rather, they're rather perceived as an agent, but that's more legalistic discussion. What's the specific difference. Ultimately, for us, it's important that we find entrepreneurs that have also the capability to recruit locally for their store, the staff that they need to run, and that they have an entrepreneurial incentives to actually maximize sales in these stores. Okay. Maybe a question, Daniel, this is my last question. Thank you. You mentioned one of the things that you wanted to do here was to expand the store base based on the capability that Valora has. Would you be working with these franchisees to do this, or would you be recruiting new franchisees? How do you expect the store network to expand in Europe? Thank you. That's my last question. Well, no, definitely, I mean, this is something that will be run by the Valora team. I think what I trying to refer in my earlier comment is more about how we can share our experience, I mean, opening that number of stores in Latin America. It's for the Valora team to run that expansion. We believe that there is a good opportunity to grow more faster in an organic way. For that, we would like to provide, I mean, our knowledge and share that with Valora. Thank you. You're welcome. The next question comes from Rodrigo Echagaray from Scotiabank. Please go ahead. Thank you. Just a question, perhaps more on the strategic rationale of this. Where would you draw the line in terms of geography? Should we expect that the company is potentially actively looking for opportunities in Asia or Africa? That's the first question. My second question is just a follow-up on the traffic trend in Europe. In Mexico also has been struggling a bit to recover some of the traffic. Obviously, part of that is COVID-related. We're just wondering if there are any traffic trends that we can highlight in Europe to compare and contrast. Yeah, sure. I mean, let me refer first on the strategic fit. I mean, as I also mentioned, I mean, we have made the decision to continue growth in the business that we are today in, and we are not looking for other, if you want, avenues of growth. In that regard, and the fact that we were looking to also increase the diversification, and that means looking for opportunities in developed markets, that is why we were analyzing opportunities both in the U.S. and also in Europe. Finally, we find Valora as a very nice fit with our strategy in order to increase that diversification, but also with a very solid operator, I mean, with proven track record. I mean, in the case of the U.S., I mean, one of the things that we have explored is the fact that, obviously all the convenience stores is or a big chunk of the convenience store business in the U.S. are related with fuels, and that's something that we don't like, I mean, as much. Second is also the fact that we know that, as we would like to create value, I mean, the multiples in the U.S. are much more expensive as it was the case, I mean, many years ago. That for me is something relevant. In that regard, I mean, we will focus obviously over the next couple of years, mainly in Europe with Valora. We are not looking for opportunities at this stage in Africa, because as I said, our strategic intent is to diversify more in mature markets. We know that we have plenty of opportunity to continue growing in emerging markets in Latin America, where it's an arena that we know very well. We are not looking at this moment in Asia. I mean, our intention is to focus in Europe and also in Latin America. I think it would be better for Michael to comment on the traffic side at Valora. Let me, before Michael. Yeah. Just to make one additional point. Obviously, this whole conversation has to do with retail, right? I think on the Coke side, obviously they already were in the Philippines. You know, they have looked at the African assets that have been in the conversation. I don't know if we're gonna eventually go back to the region, but just to be clear that we're really talking about not Coke in this conversation, right? Thank you, Juan. In terms of traffic, I think what we experience, and which is probably quite unique in terms of the setup, we have here at Valora, is that roughly 50% of our stores operate with the transportation hubs. Obviously these transportation hubs were the locations that have been affected the most by the pandemic, since more people work from home, people were encouraged to travel less. This had both in 2020 and 2021 quite an impact on our business. We saw now a very strong recovery. We also commented on earlier this morning, Swiss time, in trading up, specifically coming out of the restrictions both in the Swiss markets, where we were rather early in releasing these restrictions, and in Germany, where it took a little longer. We clearly anticipate there will be changes that we lost in terms of the travel patterns and also in terms of working. Potentially more from home. Just bear in mind, and we published on that slide some detail in our own financial documents that already pre-pandemic, there was already quite a significant amount of people, roughly 25%, if I remember correctly, working from home already, for example, in Switzerland. This number increased to 30%-33%. There was a quite steep increase, but a lot of people cannot work from home. Remind ourselves, our own employees, they have to work in a store, a healthcare worker, and roughly 50% of the traffic related to our locations is actually rather leisure related and other activities than work, and commuting to work. We are very much convinced that you will see our business recovering to previous levels. We have been confirmed by the most recent months this year. Got it. Thanks for the answers. The next question comes from Rodrigo Alcantara from UBS. Please go ahead. Yeah. Hi, good morning, gentlemen. My question is for you, Daniel. Thinking about what you just said about the potential usages of the Heineken stake, right? If you just can remind us, I mean, we were aware of the tax implications of repatriation of dividend or a capital gain in the Heineken stake from Europe to Mexico, right? There are some tax implications there. In Europe, in theory, the tax implications, if you use some proceeds of Heineken to buy assets in Europe, my sense is that the tax implications would be lower. Is that a correct assessment, Daniel, to just for a sec to kind of estimate the returns or the opportunity cost of, you know, either staying with the Heineken stake or using those, the proceeds from Heineken to buy more assets in Europe? That would be my first question, Daniel. Hi. Hi, Rodrigo, this is Juan. Let me take a stab at this one first. I mean, I think from the tax standpoint, you know, capital gains would need to be assessed. We can, you know, double-check and get back to you. I think the capital gains, which is 30% and the ballpark number we have is about $1 billion in tax. I think that is. It's not dependent on what the use of those proceeds would be, right? I think that would be in Mexico or wherever, you know. In terms of the use of the shares, as we've said before, I mean, we love Heineken. We have been very happy holders of it. We like the direction that it's being taken. There's that optionality that Daniel mentioned at the beginning, right? We are continuously evaluating what is the best thing that we could be doing, continue to own Heineken or deploy it elsewhere. As you know, we're talking about a number that is probably around $7 billion post tax. It's considerable, but I would not draw the line directly between if we were to you know buy another asset in Europe through Valora that would necessarily come from monetizing the Heineken shares. Fortunately, we have many different sources of cash generation and financing. I think the core message is that the transaction we're announcing today doesn't really change our ability to continue to fund and continue to grow the different parts of the company. That Heineken is an important part of the, you know, the gunpowder that we have for, or the war chest that we could have for growth, but it's not the only one, right? I would leave it at that. That's very clear. Thank you, Juan, for the detailed answer, and agree on that. On the second question, I mean, apologies for being very insistent, just, I mean, looking at the screen, shares 4% down with a, you know, relatively small acquisition at the end of the day. Just, I mean, just curious, Daniel, so just to confirm, I mean, those alternatives that you're exploring, we should expect those alternatives by the second half of this year, right? Just to confirm on that. If you can comment at least, among, you know, all the many alternatives that you're exploring, is, I don't know, an IPO of the U.S. assets an alternative? If you can comment, that's okay. If not, it's also okay. Thank you very much, Daniel. Yeah. No, thank you. No, I mean, as we said during our last conference call, we are considering all the alternatives. I mean, but obviously, you need to understand that first we need to share that with our board. I mean, try to bring what are the pros and cons of each of the alternatives that we are assessing. Definitely when we have a clear, if you will, [crosstalk] agreement, then we will come back to you. Yeah, I would just add one thing, Rodrigo, I mean, in terms of the comment you just made on the share price. I'm seeing our stock 3.5% down, but the market is 3% down, right? Let's just keep that in mind. Gentlemen, so far there are no more questions from the phone. Yeah, no, we're looking at the questions from the webcast. I think Rodrigo's question was already addressed, and then we have one from Tiago at Goldman Sachs. I'm gonna read the question. First part, do you have any kind of restriction or limitation in selling beer in Europe? And two, how should we think about growth in Europe? Should we expect it to be mostly centered on existing markets for Valora, or are you considering new geographies? Which banners do you think present more potential? Yeah, well, definitely regarding the beer, we don't have any restriction in Europe. So that's clear. As we don't have any restriction also in South America. How we should think about growth in Europe, I think I already mentioned. I mean, obviously, the intention is to go through Valora. I mean, there are different optionalities for us. Obviously, grow in the current market that Valora is operating. Both, I mean, a combination of organic growth and also if new opportunities appear from non-organic, obviously we will consider. Over time, we will also analyze opportunities in other geographies, but in Europe. Next question comes, Martin at Fundamenta. From a FEMSA shareholder point of view, it's clear that Valora is a good operation and a good market, but given that you won't be consolidating management teams, and geographically there is little to leverage, where are the synergies going to come from in order to create value for FEMSA shareholders? What sort of synergy is coming from the digital initiatives? Yeah, I mean, well, in terms of synergies, I mean, for us, Valora is a story of growth. I mean, we see that the main driver of value creation will be by growing the business in Europe. I mean, combining, as I already mentioned, I mean, the knowledge that the management team has developed over the last years, and also what we can bring from our experience in Latin America, and I gave the example of the organic growth. Then in terms of digital initiatives, I mean, I think we have learned over time that, I mean, the digital ecosystem requires, I mean, collaboration. I think in that regard, we know that, I mean, actually, Valora has a fintech. We already launched a fintech. I think there is a lot of opportunities that we can share knowledge within both organizations. At the same time, I mean, I see personally that there is a very nice opportunity that we need to explore even further, which is data. I mean, what we call is the new goldmine, and I think that is something that we can work together across FEMSA businesses, that is not only in retail. Particularly, I mean, the experience that both Valora has here in Europe and the experience that we are developing in Latin America, I see that is really a very nice opportunity that we can collaborate, even though that, I mean, we run this in completely different geographies. That would be my comment regarding that question. Maybe I should add from my side. First of all, quite clearly, we understand that we will, going forward, also create value for FEMSA shareholders. Apart from what Daniel mentioned, I think just bear in mind what we experienced in the past is by expanding the scale that we operated in the existing markets by maintaining a lean and efficient platform, we obviously improved overall return profiles for the capital that we allocated quite dramatically. By growing even faster than what we have realized in the past on a standalone basis, quite clearly I see an opportunity to improve return profile and ultimately the capital return for the capital that is allocated to us also quite substantially. I think next question from Alvaro at BTG. Can you please walk us through where financial leverage stands at the holding company pro forma? I mean, obviously what this does is it just changes the net debt number. It should add probably like 0.3 or 0.4. But I'll take this offline with the exact calculation, but it should add about 0.3 or 0.4 to the net debt to EBITDA ratio. Next question from Gildas Surry. Do you plan on expanding to markets like France, Spain or Italy in the next months, or is it premature? Well, as I said, I mean, our intention is that Valora, I mean, led by Michael and his team, we will work, I mean, first, based on its current business plan. That's why we have committed to provide the financial resources to deliver that plan. At the same time, once the transaction is approved and accepted, we will work together. I mean, what will be the new opportunities, let me put it this way, both in the current. Most probably it is too early to comment on which markets we are planning to consider going forward. I think that's all the questions we have on the webcast. Well, thank you very much everyone for joining us today, and let's keep in touch. Thank you, Michael. Thank you, Beat. Thanks, everyone. Thank you. Bye. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.