Despite debt, Heineken in talks with Femsa




Heineken NV is one of the companies currently in talks with Mexico’s Fomento Economico Mexicano SAB (Femsa), but the Dutch brewer’s debt poses a hurdle,

the

Wall Street Journal

reported.

Heineken is under pressure to go beyond its core strategy of selling premium beers in Western Europe and the U.S., where consumption is set to flatten or even decline. Analysts say it would be better to expand into growth markets in Latin America and Asia.

Last year, Heineken acquired parts of Scottish & Newcastle Ltd. and Denmark’s Carlsberg A/S. “So far, this takeover has had lackluster results, while also cramping Heineken’s deal-making ability with debt,” the

Journal

reported.

[A]ny deal is likely to be done using stock, rather than cash, said a person familiar with the matter…. But if Heineken issues shares to win Femsa, it could dilute the majority share the Heineken family indirectly owns and which it is unlikely to give up. The Heineken family owns Heineken through a 58% stake in Heineken Holding NV, which in turn holds 50.01% of the brewer. Still the family has enough options to issue new shares and still retain control, analysts say.

(Source:

Wall Street Journal,

Oct. 26, 2009.)

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