Monday, January 11, 2010
But I know that my son in Monterrey will be happy!
So, our Dutch multinational Heineken has purchased the Mexican brewer Femsa Cerveza for 3.8 billion euros.
It is the second major acquisition by the Dutch brewer in the last few years. In 2008, the Amsterdam-based company purchased the British Scottish & Newcastle in a joint acquisition with Danish brewer Carlsberg, paying 7.8 billion pounds sterling.
Heineken hopes its newest expansion will strengthen its hold on the Latin American market. Femsa Cerveza is the brewer of Sol, Dos Equis, Tecate and other beers.
The global beer market has seen a lot of upheaval in recent years. Developing markets, where there is still room for growth in consumption, are hotly contested by a handful of giant brewers.
Heineken got the best of several other brewers that had shown an interest in Femsa, including the Irish multinational Diageo and its direct competitor SABMiller.
Femsa, which is currently owned by a number of Mexican families, is one of Mexico’s two largest brewers. It controls about half of the local market, owns 35 beer brands and is the largest bottler of Coca Cola on the planet. The acquisition of Femsa will increase Heineken’s market share not only in Mexico, but also in Brazil and the US, where Femsa’s products are popular with Latin Americans. Many of Femsa’s products are currently distributed by Heineken in the US. This contract would have come up for grabs if another party had purchased Femsa.
Heineken’s own brand and Amstel have performed well in the American market, but these ‘premium’ beers have come under pressure due to the economic crisis.
Heineken is paying 3.8 billion for Femsa, but it will also be taking on 1.5 billion in debt and retirement plan obligations. The acquisition is funded by a stock emission which will lead to changes in the brewer’s management. The Mexicans have acquired a minority interest in Heineken, granting them two seats on the company’s supervisory board. The Heineken family will retain its controlling interest in the company. Markets responded positively to the news, with Heineken’s stock value currently up four percent.