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Mexican beverages and retail company Femsa Is Holding Talks with ‘Several Parties’ on Beer Division

By Thomas Frommherz for CEOWORLD Magazine Updated:October 2, 2009

Mexican beverages and retail company Femsa (FMX) said on it is in talks with several companies about a possible deal involving its beer business.

A source familiar with the situation told Reuters that FEMSA (FMSAUBD.MX)(FMX.N) had talked with Britain’s SABMiller Plc (SAB.L) and Heineken (HEIN.AS) from the Netherlands about a possible sale of beer operations that could be worth billions of dollars.

FEMSA confirmed being in talks “with several parties to explore opportunities involving its beer business” but added in its brief statement that “there can be no assurance that such discussions will lead to any definitive agreement.”

The Wall Street Journal reported earlier that a merger of FEMSA’s beer operations with those of a larger international player would be valued at as much as $9 billion.

SABMiller declined to comment on the report, and officials at Heineken were not immediately available.

A deal with FEMSA could give an international player access to one of the region’s most lucrative markets and create a formidable challenge to FEMSA rival Grupo Modelo (GMODELOC.MX), maker of the Corona brand.

The Mexican Stock Exchange said it halted trading in Femsa shares a half-hour before Thursday’s close pending information from the company.

The shares of domestic rival Grupo Modelo SAB (GPMCY) rose 6.3% to MXN53.77.

Femsa’s beer business, whose brands include Dos Equis and Tecate, accounted for close to MXN22 billion of the company’s MXN91 billion in sales in the first half of 2009. Femsa also has beer operations in Brazil.

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