FEMSA, Heineken Transaction is Approved
According to Zacks Equity Research, the Comisión Federal de Competencia, the anti-trust regulating authority under the Ministry of Economy, Mexico, recently approved the deal between FEMSA, formally known as Fomento Económico Mexicano, S.A.B de C.V., one of the largest brewers in the country, and Heineken N.V., the largest brewery in Europe, for the acquisition of the beer operations of the former.
Heineken will acquire FEMSA Cerveza, comprising 100 percent of its Mexican beer operations (including the United States and other export business) and the remaining 83 percent of its Brazilian beer business that Heineken does not currently own.
The deal involving an all-share transaction is valued at $7.6 billion. With the deal, the Dutch company will gain a strategic foothold in the Latin American market, which is widely recognized as one of the world's most profitable and fastest-growing beer markets.
On the other hand, the deal is expected to enable FEMSA to strengthen its competitive position in the market and increase its operational and financial flexibility. The company currently holds 43 percent of the beer market in Mexico and 9 percent in Brazil.
According to the terms of the deal, FEMSA will hold 20 percent in the Heineken Group, making it one of the largest shareholders of the company. FEMSA will also have the right to appoint two non-executive directors in Heineken. In order to finance the deal, Heineken will issue 86 million new shares. The transaction is expected to be completed in the second quarter of 2010.
Heineken will acquire FEMSA Cerveza, comprising 100 percent of its Mexican beer operations (including the United States and other export business) and the remaining 83 percent of its Brazilian beer business that Heineken does not currently own.
The deal involving an all-share transaction is valued at $7.6 billion. With the deal, the Dutch company will gain a strategic foothold in the Latin American market, which is widely recognized as one of the world's most profitable and fastest-growing beer markets.
On the other hand, the deal is expected to enable FEMSA to strengthen its competitive position in the market and increase its operational and financial flexibility. The company currently holds 43 percent of the beer market in Mexico and 9 percent in Brazil.
According to the terms of the deal, FEMSA will hold 20 percent in the Heineken Group, making it one of the largest shareholders of the company. FEMSA will also have the right to appoint two non-executive directors in Heineken. In order to finance the deal, Heineken will issue 86 million new shares. The transaction is expected to be completed in the second quarter of 2010.
