Heineken NV has agreed to buy the beer division of Fomento Economico Mexicano SAB (Femsa), Mexico’s second-biggest brewer, in an all-stock deal worth $7.7 billion,
Bloomberg News reported.
Femsa produces the Dos Equis and Tecate brands, among others.
Heineken, based in Amsterdam, will issue new shares, and Femsa, based in Monterrey, Mexico, will receive a 20% stake in Heineken Group, according to the report. Heineken distributes Femsa beers in the U.S.
The transaction allows the Dutch brewer’s founding family to maintain their controlling stake, and will boost Heineken’s earnings per share after two years.
Femsa will concentrate on growth opportunities for its Coca-Cola Femsa SAB soft-drink unit and Oxxo supermarket chain, Bloomberg reported.
Femsa was started by Monterrey’s Garza family in 1890. Chief Executive Officer Jose Antonio Fernandez is married to the daughter of Eugenio Garza, a patriarch of the business who died at 2008 at age 84.
Femsa’s only competitor in Mexico is Grupo Modelo SAB, another family-controlled company.
The
Wall Street Journal
noted
that Femsa “has steadily lost market share” to Modelo over the past two decades. The
Journal
report said:
Doing a deal with a big global brewer … could help Femsa prepare for the possibility of Modelo being acquired by AB InBev and becoming a stronger competitor. AB InBev has a 50% noncontrolling stake in Modelo, and many analysts believe the Belgian-based brewer eventually will buy a controlling stake.
(Source: Bloomberg News, Jan. 11, 2010;
Wall Street Journal,
Jan. 11, 2010.)
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