Mexico's Femsa sells 5.24 percent of Heineken for 2.5 billion euros

MEXICO CITY (Reuters) - Fomento Economico Mexicano (Femsa) said on Monday it had sold a stake of 5.24 percent in Heineken, the world’s second largest brewer for some 2.5 billion euros (2.21 billion pounds).

The logo of Coca Cola Femsa, the largest Coke bottler in the world, is pictured at its headquarters in Monterrey, Mexico April 25, 2017. Picture taken April 25, 2017. REUTERS/Daniel Becerril

Femsa FMSAUBD.MX, a Mexican bottler and retailer which sold its brewing business to Heineken in 2010 in exchange for shares, said it had offered the stake to institutional investors outside Mexico.

“Fomento Economico Mexicano ... announces today it has completed the sale of 5.24 percent of combined interest in the Heineken Group,” Femsa said in a statement.

Femsa said the offer consisted of 3.9 percent of Heineken NV's HEIN.AS equity at a price of 84.5 euros per shares, worth some 1.9 billion euros in total, as well as shares representing some 2.67 percent of Heineken NV parent, Heineken Holding HEIO.AS, at 78 euros per share, worth some 600 million euros.

The sale reduced Fema’s holding in Heineken NV to 8.63 percent from 12.53 percent and its stake in Heineken Holding to 12.26 percent from 14.94 percent, the company said.

The company’s overall economic interest in Heineken fell to 14.76 percent from 20 percent, Femsa said, noting that it expected the transaction to be finalised on Sept. 21.

The sale was executed via an accelerated book-building process carried out by JP Morgan Securities PLC, Morgan Stanley & Co. PLC and UBS Ltd, the company added. Nomura International acted as financial adviser to Femsa in the transaction.

The Mexican company said it would retain one seat on the board of directors of Heineken Holding and two on the supervisory board of Heineken NV.

L’Arche Green, the company through which the Heineken family exercises control of Heineken Holding, said it would buy back shares worth 200 million euros. The price per share would be determined by Femsa’s offer, it said in a statement.

“The participation of L’Arche Green N.V. in the share offering by Femsa underlines the long-term commitment of the Heineken family towards the Heineken company,” said L’Arche Green, which added that it was advised by Citigroup.

After Femsa’s filing, Heineken said it would retain its rights to seats on the boards of Heineken NV and Heineken Holding.

Carlos Salazar Lomelin, Femsa’s chief executive, said the Mexican firm had long held “a very positive view” of Heineken as a long-term investment and that the sale did not represent or reflect a change in its view or expectations.

But the sale would allow Femsa to take advantage of favourable tax treatment afforded by a repatriations decree issued by Mexico’s government at the start of 2017, he said.

“In accordance with that decree, we plan to invest the proceeds of the share offering to support our growth initiatives in Mexico in the coming years,” he added.

In July, Heineken told Femsa's bottling unit Coca-Cola Femsa KOFL.MX that it was set to lose its contract to distribute the beer in Brazil. At the time, Femsa executives said talks about dissolving that contract would not affect the larger strategic relationship between the companies.

Shares in Femsa closed up nearly 1.9 percent at 175.06 pesos ($9.84) per share on Monday, while Heineken NV shares closed barely changed at 87.59 euros.

Reporting by Gabriel Stargardter; Additional reporting by Anthony Deutsch, Philip Blenkinsop and Dave Graham; Editing by Rosalba O’Brien and Dan Grebler