Heineken buys Mex­ico’s Sol beer

SABMiller walks away from the bid­ding

Weekend Argus (Saturday Edition) - - AUCTIONS - By Nick Clark

HEINEKEN has agreed to buy the Mex­i­can brewer of Sol beer af­ter ri­val SABMiller walked away from the bid­ding, in a

5.3 bil­lion (R57bn) deal it hopes will “trans­form” its op­er­a­tions in Latin Amer­ica.

Heineken, the world’s sec­ond-largest brewer by rev­enues, yes­ter­day an­nounced it had se­cured the beer op­er­a­tions of Fo­mento Económico Mex­i­cano SAB (Femsa) in an all-share deal.

Jean-François van Boxmeer, chair­man and chief ex­ec­u­tive of the Dutch brewer, said the buy “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.”

Based upon the group’s

‘The deal is less ex­pen­sive than had been ru­moured, and the syn­er­gies out­lined are higher than ex­pected’ – brew­ing in­dus­try an­a­lyst

clos­ing price of 32.92 yes­ter­day, the eq­uity value of the deal is 3.8bn. The to­tal value of Femsa Cerveza rises to

5.3bn in­clud­ing net debt and pen­sion obli­ga­tions.

One brew­ing in­dus­try ana- lyst said: “The deal is less ex­pen­sive than had been ru­moured, and the syn­er­gies out­lined are higher than ex­pected.”

The take over of Femsa Cerveza, which also owns the Dos Equis brand, in­cluded all of the group’s Mex­i­can beer op­er­a­tions and its Brazil­ian beer busi­ness, in which Heineken al­ready owned a mi­nor­ity stake.

Favourite SABMiller pulled out of the auc­tion at the 11th hour, ac­cord­ing to peo­ple close to the deal, leav­ing the way clear for Heineken.

It is un­der­stood that the group was not in­ter­ested in Femsa’s Brazil­ian op­er­a­tion and was pre­pared to ta­ble a deal worth $7bn, which ex­cluded the busi­ness. SAB, which de­clined to com­ment, walked away af­ter it emerged that a deal without the Brazil­ian arm “was not vi­able”.

José An­to­nio Fernández Car­ba­jal, chair­man and chief ex­ec­u­tive of Femsa, said Heineken pre­sented “the most com­pelling op­por­tu­nity to trans­form our brew­ing as­sets”.

The deal will pro­vide Femsa with a 20 per­cent stake in Heineken. The Mex­i­can group will also ap­point two non-ex­ec­u­tive direc­tors to the board.

Heineken, which bought brands in­clud­ing John Smith’s and Foster’s from Scot­tish & New­cas­tle in 2008, has ear­marked cost sav­ings of 150m by 2013, but an­a­lysts were con­cerned that the deal wouldn’t de­liver “ pos­i­tive eco­nomic profit” for six years.

Femsa has a 43 per­cent share of the Mex­i­can mar­ket, the fourth largest in the world. It also strength­ens Heineken in the “highly prof­itable” im­port mar­ket into the US, es­pe­cially in its grow­ing His­panic pop­u­la­tion. In Brazil, the group has a 9 per­cent share. – The In­de­pen­dent

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