Mexico: Femsa sells 5% in Heineken for €2.5 billion

Fomento Economico Mexicano (FEMSA), a Mexican bottler and retailer and the world’s largest Coke bottler by volume, announced on Monday the completion of its sale of one fourth of its shares in Heineken, representing about a 5% stake in the world’s second largest brewer, to institutional investors outside of Mexico for approximatley €2.5bn ($3bn), according to a statement filed to the Mexican stock exchange.

FEMSA sold its brewing business to Heineken in 2010 and received in exchange 12.53% of Heineken NV and also 14.94% of Heineken Holding (parent company of Heineken NV), which represents overall an economic interest of 20% in the group. This made FEMSA the largest shareholder in Heineken after the Heineken family.

Heineken confirmed the sale and said that FEMSA's shareholding in Heineken N.V. has reduced from 12.53% to 8.63% and in Heineken Holding N.V. from 14.94% to 12.26%, providing for an overall decrease of FEMSA's economic interest in Heineken from 20.00% to 14.76%.

The sale will not change FEMSA’s existing governance rights, including one seat on the Board of Directors of Heineken Holding N.V. and two seats on the Supervisory Board of Heineken N.V.

In FEMSA's filing with the Mexican stock exchange Carlos Salazar Lomelín, FEMSA's Chief Executive Officer, commented: "We have long held a very positive view of Heineken as a long-term investment. The transaction priced today does not represent or reflect a change in our view or expectations. However, the Equity Offering will allow us to partially monetize our position while retaining our existing governance rights in Heineken, taking advantage of the favourable tax treatment afforded by the Repatriation Decree issued by the Mexican Government. In accordance with the Decree, we plan to invest the proceeds of the Equity Offering to support our growth initiatives in Mexico in the coming years."

The reduction of the Heineken participation is one of the last major acts of Carlos Salazar Lomelín as CEO of FEMSA, who has worked nearly 45 for the company and who is going to retire by the end of the year. He will be succeeded by Eduardo Padilla Silva, currently Chief Financial and Corporate Officer of FEMSA.

L'Arche Green N.V., the company through which the Heineken Family exercises control of Heineken Holding N.V., announced on 18 September 2017, following the announcement of the share sale, its intention to buy 2,564,102 shares of Heineken Holding N.V. for an amount of €200 million ($239m). Currently L'Arche Green holds 51.709% in Heineken Holding NV, which in turn holds an interest of 50.005% in Heineken NV.

According to L'Arche Green the purchase “underlines the long-term commitment of the Heineken family towards the Heineken company, founded by the Heineken family in 1864.The family have been shareholders of Heineken Holding NV since its incorporation in 1952.”

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