World: Heineken controlling shareholder to buy €200 mln of brewery’s shares put up for sale by Mexico’s Femsa

Heineken’s controlling shareholder, L’Arche Green NV will boost its stake in the Dutch brewer by buying €200 mln of the €2.5 blnn in shares – some 5 per cent – being put up for sale in a surprise offering by Mexico’s Femsa after the partners fell out in July over distribution rights in Brazil, the Financial Times reported on September 18.

L’Arche Green NV is the company through which the Heineken Family controls Heineken Holding NV. It currently holds 51.709 per cent in Heineken Holding NV, which in turn holds an interest of 50.005 per cent in Heineken NV. Together Heineken Holding NV and Heineken NV make up Heineken Group. Femsa currently holds a 20 per cent stake, consisting of 14.94 per cent of Heineken Holding NV and 12.53 per cent of Heineken NV.

“The participation of L’Arche Green NV in the share offering by Femsa underlines the long-term commitment of the Heineken family towards the Heineken company, founded by the Heineken family in 1864,” it said in a statement. “The family have been shareholders of Heineken Holding NV since its incorporation in 1952.”

Femsa, the Mexican group whose Coca-Cola Femsa venture is the world’s largest Coke bottler by volume, earlier announced it had launched an IPO for up to €2.5 bln – or some 5 per cent – in Heineken Group, according to a statement filed to the Mexican stock exchange.

Under the terms of its 2010 corporate governance agreement, it said it will maintain its current rights including a seat on Heineken’s board and two seats on its supervisory committee.

No one was immediately available at Femsa to comment on the decision, but Heineken’s purchase this year of Kirin’s beer business in Brazil has led to a disagreement between the Dutch brewer and Femsa over the distribution of the beer brands previously owned by the Japanese group.

Femsa said in July that it disagreed with Heineken’s notice to end the group’s distribution contract – saying it believed it remained in force until 2022. “We are currently studying the implementation of possible actions; and in the meantime we are looking for a constructive dialogue with Heineken,” it said in its second-quarter result report.

Analysts at Liberum said: “Heineken intends to take Brazilian distribution in-house post its acquisition of Brasil Kirin and leverage the scale and stronger commercial platform of the enlarged unit. …We expect Heineken will agree to compensation.”

Femsa’s stake in Heineken dates back to 2010 when the Dutch brewer acquired Femsa’s beer brands in Mexico. The lock-up clause on Femsa’s 20 per cent shareholding expired in 2015. At the time, analysts said that Femsa would be unlikely to sell unless it had an acquisition in mind. Femsa is one of Coca-Cola’s largest bottlers and could have an eye on assets from the US soft drinks group.

The price per share will be set by an accelerated bookbuilding process for institutional investors outside Mexico which L’Arche Green, which was advised by Citigroup, said it would participate in.

Femsa last month announced that Eduardo Padilla will succeed Carlos Salazar as CEO from January 2018. The decision to wind-down part of the stake could suggest that Femsa may have abandoned any hopes of having a strategic influence in the development of the family-controlled Dutch brewer.

The Heineken family rebuffed an approach from SABMiller in 2014, before the London-listed brewer was taken over by Anheuser-Busch InBev in a £79 bln deal. That takeover made Heineken the world’s second largest-brewer – albeit by some distance – after AB InBev.

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