The total transaction, which is valued at $7.437bn, will give Heineken a major new platform for growth in Latin America.
Under the deal, Heineken will take charge of Fomento Economico Mexicano (FEMSA) Cerveza, and its beer brands, including Dos Equis, Sol, and Tecate.
In exchange, Heineken will assume the $2.1bn debt at FEMSA Cerveza, and FEMSA will receive 43m shares in Heineken Holding, valued at $32.92, and 72m shares in Heineken, valued at $29.38.
Heineken said the deal presents the company with several “compelling strategic benefits”.
These include the opportunity to expand into growing and profitable beer markets in Mexico, Brazil and the US, where FEMSA Cerveza has an established following among Hispanic drinkers.
The brewer said other advantages include scope to grow the Heineken brand in Latin America, access to strong revenues and cash flows, increased exposure to emerging markets and ownership of strong international beer brands.
Heineken CEO Jean-Francois van Boxmeer said: “Through this deal we become 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 beer market, expands our leading portfolio of leading international brands and enhances our leading position in the US import market.”
The Heineken CEO said the deal also marks the next stage in the company’s strong association with FEMSA.
Focus and flexibility
As for FEMSA, the Latin American company said selling its beer operations would enable it to concentrate on growth opportunities for Coca-Cola FEMSA and OXXO. FEMSA said the deal would also give the company increased operational and financial flexibility.
Jose Antonio Fernandez Carbajal, CEO of FEMSA, said: “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.”