Heineken NV may buy back some of its shares from Fomento Economico Mexicano SAB, the brewer’s second-largest shareholder, after the Mexican multinational decided to sell its stake.
(Bloomberg) — Heineken NV may buy back some of its shares from Fomento Economico Mexicano SAB, the brewer’s second-largest shareholder, after the Mexican multinational decided to sell its stake.
Femsa, as the company is known, announced the sale plan late Wednesday and said it resulted from a strategic review to shore up its share price. The stake is currently worth about €7.3 billion, according to analysts at Jefferies.
The Dutch brewer said it may buy some of the stock that Femsa plans to sell in the next 24 to 36 months. Heineken shares fell as much as 1.5% in Amsterdam trading.
Femsa is the largest convenience retailer in Latin America and operates about 20,000 stores and more than 3,600 pharmacies across the region. The Mexican group picked up a 20% stake in Heineken in 2010 but trimmed it to 14.8% in a €2.5-billion ($3 billion) transaction in 2017.
Femsa’s Chief Executive Officer Daniel Rodriguez Cofre said the company is now convinced that the best way to continue creating value is “through a structure that focuses solely on the businesses that are core to us.” Last year Femsa struck a deal to buy Switzerland’s Valora, which operates about 2,700 cafes and convenience stores, for as much as $1.2 billion to push into Europe.
The Mexican group’s holding in Heineken is split between two entities, Heineken NV and its holding company. Representatives of Femsa will resign from Heineken’s supervisory board and Heineken Holding NV’s board of directors.
“Uncertainty around the timing of the placing creates a short-term overhang for the shares,” Edward Mundy, an analyst at Jefferies, said in a note to clients. “If Heineken was to participate in the placing, this would remove the overhang and send a message that the board views the shares as undervalued.”
Femsa’s decision to sell its stake in Heineken had been widely anticipated, said James Edwardes Jones, an analyst at RBC Capital Markets.
“This is not helpful for the Heineken share price, but should not be more than a temporary blip,” he said in the note. “It sounds like Heineken feels it has the wherewithal to buy back some or all of Femsa’s stake.”
On Wednesday, Heineken, the world’s second-largest brewer, said beer volumes rose 6.9% on an organic basis in 2022, just above the average analyst estimate, as drinkers remained resilient despite higher prices. The company said organic operating profit will grow by mid-to-high single-digits this year.
–With assistance from James Cone.
(Updates share move and adds details)
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