Business NEWS

Dutch brewer Heineken, is looking to buy Mexican Femsa

By Thomas Frommherz for CEOWORLD Magazine Updated:October 26, 2009

Dutch brewer, Heineken (HEIN.AS), is looking to buy the brewing operations of Mexican conglomerate, Femsa (FMSAUBD.MX), Financial Times reports. The beer business, Femsa Cerveza, is said to be valued at around $7.5 billion.

Speculation over the outcome of a sale of Femsa’s beer business , which is estimated to be worth about $7.5bn, has centred on SABMiller as the most likely buyer, although Heineken has also held discussions. The UK-listed brewer has more synergies – estimated at $150m – with Femsa than Heineken, and a stronger balance sheet.

Heineken, which has a net debt to earnings before interest, tax, depreciation and amortisation ratio of 3.5 times, has less financial flexibility and is smaller, with a market capitalisation of €14.65bn ($22bn) compared with SABMiller’s £26.9bn ($44bn).

Heineken is looking to strengthen its position in Brazil through the planned acquisition of Femsa’s division. SABMiller is, however, said to be the most likely buyer with a market capitalization of $44 billion as compared to Heineken’s $22 billion.

Heineken’s acquisition of parts of Scottish & Newcastle Ltd. last year, in a €10.34 billion ($15.51 billion) deal along with Denmark’s CarlsbergA/S, extended its traditional focus on European and U.S. beers. So far, this takeover has had lackluster results, while also cramping Heineken’s deal-making ability with debt. In the first half of this year, the company managed to offset shrinking volumes by cutting costs and bolstering prices.

SABMiller Plc (SAB.L) is seen as a front-runner to buy Mexico’s No. 2 brewery, owned by FEMSA.

Sphere: Related Content

Like this article! ‹ German drug and chemical maker Merck KGaA net income falls Sir Richard Branson’s Virgin Money applies to FSA for banking licence- Virgin Bank ›
Share this Post: Get It Delivered To Your Inbox