Heineken to buy Mexican brewery worth €5.3bn

"Heineken... will create a major new platform for growth by acquiring the beer operations of Femsa via an all share transaction," the Dutch company said in a statement.

"Heineken will acquire Femsa Cerveza, comprising 100% of Femsa's Mexican beer operations and the remaining 83% of Femsa's Brazilian beer business that Heineken does not currently own."

Heineken said the implied equity value of Femsa Cerveza, maker of such brands as Dos Equis, Tecate and Sol, was €3.8 billion. The total implied enterprise value, with net debt and pension obligations, was €5.3 billion.

As a result of the deal, Femsa will hold a 20-% interest in the Heineken Group, making it the second largest shareholder. Femsa will have the right to appoint two non-executive representatives to Heineken's supervisory board.

"The transaction is expected to be earnings-per-share accretive after two years and to deliver positive economic profit after six years," said the statement.

The transaction is expected to close in the second quarter of 2010.

"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," Heineken chief executive Jean-Francois van Boxmeer said.

It also helped consolidate Heineken's position as the world's second largest brewer by revenue (€16.7 billion).

"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."

Femsa chief executive officer Jose Antonio Fernandez Carbajal said the deal would allow "Femsa's beer operations to become an integral part of Heineken's leading global platform".

Heineken's shares gained more than 3.6% in value on the Amsterdam stock exchange following the announcement.

Source: AFP

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