Heineken acquires FEMSA Cerveza

11 January, 2010

Heineken NV is to acquire the beer operations of Fomento Económico Mexicano, SAB. de CV (FEMSA) via an all share transaction.

Heineken is to acquire FEMSA Cerveza, comprising 100% of FEMSA’s Mexican beer operations (including its US and other export business) and the remaining 83% of FEMSA’s Brazilian beer business that Heineken does not currently own.

As a result of the transaction, FEMSA will hold a 20.0% economic interest in the Heineken Group (with shareholdings at both Heineken and Heineken Holding. A portion of the Heineken shares allotted to FEMSA will be delivered over a period of not more than five years and FEMSA will have the right to appoint two non executive representatives to Heineken’s supervisory board. One of whom will be a vice chairman of the Heineken NV supervisory board and will also be appointed to the boa rd of directors of Heineken Holding. Heineken Holding will maintain its 50.005% stake in Heineken NV.

Based upon the Heineken NV share price of €32.925, as at 8 January 2010, the implied equity value of FEMSA Cerveza is €3.8 billion (USD5.5 billion). Including net debt and pension obligations of USD2.1 billion (€1.5 billion), the total implied enterprise value for FEMSA Cerveza is approximately €5.3 billion (USD7.6 billion).

FEMSA brands include Dos Equis, Tecate and Sol.

Commenting on the transaction, Jean-François van Boxmeer, chairman and chief executive of Heineken, said: “This is a compelling and significant development for Heineken. It 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. 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. I am confident that this transaction will generate considerable future value for stakeholders in both groups.

“I am delighted to welcome our new and talented colleagues into Heineken. We will benefit from their considerable skills, experience and ideas. We also welcome FEMSA as a significant shareholder in the Heineken Group. We look forward to their valuable contribution to our future.”

Commenting on the transaction, José Antonio Fernández Carbajal, chairman of the board and CEO of FEMSA said: “We are enthusiastic about this transaction, which allows FEMSA’s beer operations to become an integral part of Heineken’s leading global platform. In the context of the reconfiguration of the global brewing landscape, scale and geographic diversification are more important than ever, and this transaction responds to that imperative. Heineken presented us with the most compelling opportunity to transform our brewing assets. It enables us to unlock the significant value that we have created during the past decade, while also allowing our shareholders, through our significant stake in Heineken, to participate in the long-term value creation we believe will come from aligning FEMSA Cerveza with Heineken. At the same time, this transaction increases FEMSA’s operational and financial flexibility, allowing us to focus our attention and resources on the significant growth opportunities for Coca-Cola FEMSA and OXXO”.

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