FEMSA and Heineken row over Brazil – every so civilly
Is it tit for tat? Heineken’s controlling shareholder, L’Arche Green, was forced to increase its stake in the Dutch brewer in September 2017 by buying EUR 200 million (USD 235 million) of the EUR 2.5 billion in shares, which were put up for sale in a surprise auction by Mexico’s FEMSA after the partners fell out earlier this year over distribution rights in Brazil.
In July 2017, Heineken said it will discontinue its distribution partnership with Coca-Cola FEMSA in Brazil, following its EUR 665 million acquisition of Kirin’s struggling Brazilian business. It thus abandoned its tie-in with Coca-Cola FEMSA in favour of leveraging Brasil Kirin’s existing routes to market for the Heineken portfolio.
The partnership between Heineken and Coca-Cola FEMSA had been due to last at least until 2022, but Heineken’s action threw this into doubt.
L’Arche Green is the company through which the Heineken family controls Heineken Holding NV. It currently holds 51.709 percent in Heineken Holding NV, which in turn holds an interest of 50.005 percent in Heineken NV. Together Heineken Holding NV and Heineken NV make up Heineken Group.
Latin America’s largest Coke bottler by volume, FEMSA, currently holds a 20 percent stake, consisting of 14.94 percent of Heineken Holding NV and 12.53 percent of Heineken NV.
Though it will dilute its stake to 14.76 percent overall, the sale will not change FEMSA’s existing governance rights, including one seat on the Board of Directors of Heineken Holding and two seats on the Supervisory Board of Heineken NV.
FEMSA’s CEO was quick to stress that the transaction did not imply that the company had changed its view of Heineken. Instead, he insisted FEMSA has long held “a very positive view” of Heineken as a long-term investment.”
In 2010, FEMSA sold its FEMSA Cerveza beer business, with brands including Dos Equis, Sol and Tecate, to Heineken in exchange for a stake in Heineken. This made FEMSA the largest shareholder in Heineken after the Heineken family.
The Heineken family can easily afford to splash out EUR 200 million to secure its position in the brewer. Charlene de Carvalho-Heineken’s controlling stake pays in excess of EUR 100 million in dividends each year, Dutch media reported.
