Diplomat enters Mexico with $45 million acquisition of two local distributors
The Israeli consumer goods importer will acquire 60% of two Mexican companies for NIS 142 million, approximately 40% below the amount initially contemplated. The deal will expand Diplomat's operations to eight countries.
Israeli food and consumer goods importer Diplomat is expanding into Mexico through the acquisition of controlling stakes in two local companies for NIS 142 million ($44.8 million). The consideration is approximately 40% lower than the amount stipulated in a memorandum of understanding signed last March, reflecting a decline in the companies' net profits in 2025 and adjustments for their net debt.
Diplomat will acquire 60% of each company, with an option to purchase the sellers' remaining shares in three years.
Diplomat currently operates in seven countries: Israel, South Africa, Georgia, New Zealand, Cyprus, Greece and Romania. Upon completion of the transaction, Mexico will become its eighth market.
The two companies have been active in the Mexican consumer goods market for many years, distributing food, personal care products, cleaning supplies, and health and beauty products to a range of retail and wholesale customers. Under the agreement, Diplomat, through its subsidiary Diplomat Cyprus, will acquire the shares from the two sellers. Completion of the transaction is subject to approval by the Mexican competition authority and the fulfillment of other conditions precedent.
The financial performance of the two businesses was mixed in 2025. The first company increased sales by 13% to 1.2 billion Mexican pesos, but its operating profit fell by 9.2% to 104.1 million pesos. Net profit declined by 36% to 42 million pesos.
The second company recorded 2% sales growth, reaching 634 million pesos. Its operating profit increased by 17.2% to 80.7 million pesos, but net profit fell by 16.4% to 36.7 million pesos.
Following completion of the acquisition, Diplomat plans to implement its business strategies at both companies and accelerate their sales growth. It intends to leverage its relationships with global suppliers and pursue local mergers and acquisitions, while improving operational efficiency through the introduction of its own technology and upgrades to core sales and operations processes.
Yaron Bloom, CEO of the Diplomat Group, said: "Signing the agreement to acquire a controlling interest in the Mexican companies marks a significant step in the Diplomat Group’s global expansion. It aligns with our strategy to extend our operations into new markets and diversify our revenue streams. The acquired companies possess extensive experience and have demonstrated consistent year-over-year growth alongside high profitability. We see significant business potential in the Mexican market and believe that combining the acquired companies' business infrastructure with the managerial and operational capabilities Diplomat has cultivated over the years will enable us to accelerate their growth and generate substantial value for the Diplomat Group."
"We intend to continue exploring further strategic opportunities in additional countries, as part of our vision to further establish Diplomat’s position as a leading global group in its field," he added.
The Mexican acquisition follows Diplomat's completion last month of the first tranche of a bond issuance, known as Series A, totaling approximately NIS 300 million ($94.6 million). The bonds carry an annual interest rate of approximately 4.49%, are denominated in shekels and are not linked to an index. Their average duration is approximately five years.
In June, Diplomat also secured a distribution agreement with Japan Tobacco International (JTI), a marketer of cigarettes and other tobacco products. The agreement is scheduled to take effect in February 2027 and is expected to generate annual gross revenue of approximately NIS 2.2 billion ($694 million), or around NIS 440 million ($138.8 million) after deducting purchase tax.
