Online BusinessHeineken to buy FEMSA's beer biz for $7.6 bn
Global brewer Heineken will buy the beer business of Mexico-based Fomento Economico Mexicano, SAB de CV (FEMSA), in an all share transaction worth $7.6 billion.
- Global meltdown - Heineken"s last frontier - A perfect brew - UB, Heineken toast a tie-up - Heineken inks beer alliance with UB - UB, Heineken reportedly near to sealing deal
The deal, which would strengthen Heineken"s presence in the global beer market, is expected to close in the second quarter of 2010, Heineken said in a statement today.
Heineken would acquire FEMSA Cerveza -- the company"s Mexican beer operations (including its US and other export business). The Dutch firm would also buy the remaining 83 per cent of FEMSA"s Brazilian beer business that Heineken does not currently own.
Following the transaction, FEMSA would hold a 20 per cent economic interest in the Heineken Group (with shareholdings at both Heineken and Heineken Holding NV).
"...The implied equity value of FEMSA Cerveza is euro 3.8 billion ($5.5 billion).
"Including net debt and pension obligations of $2.1 billion (euro 1.5 billion), the total implied enterprise value for FEMSA Cerveza is about euro 5.3 billion ($7.6 billion)," the statement noted.
The valuation is based on Heineken shares"closing price of euro 32.925 as on January 8.
The proposed acquisition is anticipated to result in annual cost synergies and savings worth about euro 150 million by 2013.
Once the deal is complete, FEMSA would be the second largest shareholder in the Heineken Group. The Mexican entity would have 12.5 per cent stake in Heineken and 14.9 per cent shareholding in Heineken Holding, which together represent a 20 per cent economic interest in the Heineken Group.
The statement noted that FEMSA would have the right to appoint two non-executive representatives, including a vice chairman, to the supervisory board of Heineken.
The proposed deal is subject to approval from regulators and the shareholders of Heineken, Heineken Holding and FEMSA.
Heineken"s Chairman and CEO Jean-Francois van Boxmeer said the deal is a compelling and significant development for the firm.
"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 acquisition strengthens considerably our position within the global beer market, expands our portfolio of leading international brands and enhances our leading position in the US import market," Boxmeer added.