FEMSA makes 163% killing from Heineken stake sale

Mexican group FEMSA has sold off just over 5% of the 20% stake it holds in Heineken, bringing in almost US$3bn.

Seven years ago, Heineken acquired FEMSA's beer business, FEMSA Cerveza, in return for the 20% stake. The deal at the time valued the 20% holding at around EUR3.8bn.

FEMSA Cerveza is the number two brewer in Mexico.

Late yesterday, FEMSA confirmed its intention to offload 5.24% of the interest in Heineken, for a total value of EUR2.5bn (US$2.99m). The transaction comprises 22.5m shares in Heineken – at EUR84.5 per share – and 7.7m shares in Heineken Holding – at EUR78 per share.

Heineken Holding is a 50.005% shareholder in Heineken.

In a filing to the Mexican stock exchange, FEMSA CEO Carlos Salazar Lomelín said: "The equity offering will allow us to partially monetise our position while retaining our existing governance rights in Heineken, taking advantage of the favourable tax treatment afforded by the Repatriation Decree issued (in January) 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."

FEMSA's total stake in Heineken has subsequently dropped from 20% to 14.76%, although the Mexican group will retain its one seat on Heineken Holding's board and the two seats on the supervisory board of Heineken.

Also yesterday, the company through which the Heineken family exercises control of Heineken Holding, L'Arche Green, said it would buy just over 2.5m shares in Heineken Holding from FEMSA, for EUR200m.

Here is the maths: In January 2010, when the purchase of FEMSA Cerveza was announced, Heineken's share price stood at EUR32.925. This valued FEMSA's 20% stake in Heineken at EUR3.8bn at the time.

Yesterday's sale was for EUR84.5 per share – well over double the price seven years ago.

The value of FEMSA's stake in Heineken, then, has increased from EUR3.8bn to around EUR10bn in seven years - a rise of 163%.