Heineken taps Mexican beer market

11.01.2010 By: TRANSFER based on press releases

Heineken is to take over the beer brewing division of its Mexican counterpart Femsa, the Dutch company said Monday, marking the second takeover by Heineken within two years.

Heineken said it would take over all of Femsa's Mexican beer operations as well as 83% of Femsa's activities in Brazil, establishing itself strongly on the South American market and gaining the right to sell its own brand locally.

The transaction is to be financed through shares, with Femsa receiving a 20% interest in the Heineken Group. The Heineken family, however, would retain control of the company. Based on the Heineken NV's share price of US $46.993 of January 8, the equity value of Femsa Cerveza is $5.5 billion.

Heineken said it would release 86 million new shares to finance the takeover, which would make Heineken the second largest beer provider on the Mexican market. Analyst Jan Meijer of Theodoor Gillissen investments called the takeover "unique, because the beer markets in Central and South America are growing rapidly. Until now, Heineken had only a limited presence on that continent."

Heineken chief executive Jean-Francois van Boxmeer said Heineken would become a "much stronger, more competitive player in Latin America, one of the world's most profitable and fastest growing beer markets". Investors responded positively to the move. In 2008, Heineken and its Danish competitor Carlsberg took over British Scottish & Newcastle for more than 10 billion euros.