Heineken to purchase FEMSA Cerveza for US$5.5bn

Posted by Daniel Palmer on 12th January 2010

Dutch brewer Heineken is set to expand their global operations with the purchase of one of the largest beer businesses in Latin America.

The company will buy the beer division of Mexico-based Fomento Económico Mexicano, S.A.B. de C.V (FEMSA) for €3.8 billion (USD5.5 billion). The all-scrip deal will see FEMSA receive a 20 per cent in Heineken – the world’s third largest brewer – and two seats on the Board.

FEMSA will continue to operate their other business as a Coca-Cola bottler and convenience store operator.

Approval likely

The Transaction is expected to close in the second quarter of 2010 and is subject to approval of regulatory authorities and shareholders of Heineken, Heineken Holding and FEMSA.

Heineken Holding, the controlling shareholder of Heineken, has committed to vote in favour of the proposed transaction as has L’Arche Green N.V., the controlling shareholder of Heineken Holding, at the respective shareholder meetings. In addition, the Voting Trust which controls 39% of FEMSA has entered into an undertaking to vote in favour of the Transaction at the FEMSA shareholder meeting.

“This is a compelling and significant development for Heineken,” Jean-François van Boxmeer, Chairman and Chief Executive of Heineken, said. “It transforms our future in the Americas and marks the next stage in Heineken’s strong association with FEMSA. Through this deal we become a much stronger, more competitive player in Latin America, one of the world’s most profitable and fastest growing beer markets.”

The deal will see them gain access to brands like Dos Equis, Tecate and Sol.

FEMSA shares slid on the announcement as traders had been betting on a bidding battle between Heineken and SABMiller, which didn’t eventuate as SABMiller were not interested in FEMSA’s Brazilian operations, according to Reuters.

However, José Antonio Fernández Carbajal, Chairman of the Board and CEO of FEMSA, was adamant the deal provided value to shareholders.

“We are enthusiastic about this transaction, which allows FEMSA’s beer operations to become an integral part of Heineken’s leading global platform,” he said. “In the context of the reconfiguration of the global brewing landscape, scale and geographic diversification are more important than ever, and this transaction responds to that imperative. Heineken presented us with the most compelling opportunity to transform our brewing assets.”