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Heineken to Buy Femsa Beer Operations

AMSTERDAM -- Brewer Heineken NV will acquire the beer operations of Fomento Economico Mexicano SAB de CV, or Femsa, maker of Dos Equis and Tecate beer brands, through an all-share transaction valuing Femsa at EUR5.3 billion, Dow Jones Newswires reported.

"This is a compelling and significant development for Heineken which will transform our future in the Americas, offering opportunities for accelerating sales in the rapidly growing markets of Brazil and Mexico," Heineken Chief Executive Jean Francois van Boxmeer said in the report.

Van Boxmeer added the percentage of Heineken's earnings before interest, tax and amortization from emerging markets will rise to 40 percent from 32 percent after the deal.

As a result, Femsa will hold a 20 percent stake in Heineken Group, with 12.5 percent of Heineken NV and 14.9 percent of Heineken Holding. It will also have the right to appoint two non-executive representatives to Heineken's board, one of which will also be appointed to the board of directors of Heineken Holding, according to the report.

In addition, Femsa will become the second-largest shareholder of Heineken NV, while Heineken Holding retains its 50 percent stake in that company.

Heineken Chief Financial Officer Rene Hooft Graafland said the structure of the all-share deal was at Femsa's request. "Femsa wanted to diversify by reinvesting in a major brewer," he said in the report.

The Dutch brewer estimates annual cost synergies will amount to EUR150 million by 2013.

Heineken expects to close the transaction in the second quarter 2010.

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