FEMSA Agrees to Exchange Beer Operations for 20% Economic Interest in Heineken

MONTERREY, Mexico, Jan. 11 /PRNewswire-FirstCall/ -- Fomento Economico Mexicano, S.A.B. de C.V. ("FEMSA" "FMX") (NYSE: FMX; BMV: FEMSAUBD), the largest beverage company in Latin America, today announced that its Board of Directors has unanimously approved a definitive agreement under which FEMSA will exchange its FEMSA Cerveza business unit for a 20% economic interest in Heineken (HEIA.NA; HEIN.AS; HEIO.NA; HEIO.AS), one of the world's leading brewers. Under the terms of the agreement, FEMSA will receive 43,018,320 shares of Heineken Holding N.V. and 72,182,201 shares of Heineken N.V., of which 29,172,502 will be delivered pursuant to an allotted share delivery instrument. It is expected that the allotted shares will be acquired by Heineken in the secondary market for delivery to FEMSA over a term not to exceed five years. Heineken also will assume US$ 2.1 billion of indebtedness including FEMSA Cerveza's unfunded pension obligations. The total transaction is valued at approximately US$ 7.347 billion, based on closing prices of euro 32.92 for Heineken N.V. and euro 29.38 for Heineken Holding N.V. on January 8, 2010, including the assumed debt. Jose Antonio Fernandez Carbajal, Chairman of the Board and Chief Executive Officer of FEMSA, will join Heineken N.V.'s Supervisory Board as a Vice Chairman. Mr. Fernandez will also serve as Chairman of the newly-formed Americas Committee and will be a member of the Heineken Holding N.V. Board. Another member of FEMSA's senior management team will also serve on the Heineken N.V. Supervisory Board.

Mr. Fernandez said, "We are enthusiastic about this transaction, which positions FEMSA's beer operations to become an integral part of Heineken's leading global platform. In the context of the reconfiguration of the global brewing landscape, scale and geographic diversification are more important than ever, and this transaction responds to that imperative. Heineken presented us with the most compelling opportunity to transform our brewing assets, enabling us to unlock the significant value that we have created during the past decade. The transaction also allows our shareholders, through our significant stake in Heineken, to participate in the long-term value creation we believe will come from aligning FEMSA Cerveza with Heineken. At the same time, it increases FEMSA's operational and financial flexibility, allowing us to focus our attention and resources on the significant growth opportunities for Coca-Cola FEMSA and OXXO."

Commenting on the Transaction, Jean-Francois van Boxmeer, Chairman and Chief Executive of Heineken, said:

"This is a compelling and significant development for Heineken. It transforms our future in the Americas and marks the next stage in Heineken's strong association with FEMSA. Through this deal we become a much stronger, more competitive player in Latin America, one of the world's most profitable and fastest growing beer markets. The acquisition strengthens considerably our position within the global beer market, expands our portfolio of leading international brands and enhances our leading position in the US import market. I am confident that this transaction will generate considerable future value for stakeholders in both groups.

"I am delighted to welcome our new and talented colleagues into Heineken. We will benefit from their considerable skills, experience and ideas. We also welcome FEMSA as a significant shareholder in the Heineken Group. We look forward to their valuable contribution to our future."

The transaction combines FEMSA Cerveza's beer brands, including Dos Equis, Sol and Tecate, with Heineken's global platform and Premium brand portfolio, including Heineken, the iconic and only truly global premium beer brand, as well as Amstel, Birra Moretti and Cruzcampo. Heineken will gain important market positions in Mexico and Brazil, further strengthening Heineken's worldwide footprint. Under a long-standing agreement, Heineken currently distributes FEMSA Cerveza's beer brands in the U.S., and the two companies also share joint ownership of their beer operations in Brazil.

The transaction, which is expected to be completed in the first half of 2010, is subject to customary regulatory approvals, as well as approval by FEMSA, Heineken N.V. and Heineken Holding N.V. shareholders.

Allen & Company, N M Rothschild & Sons Ltd., and Rebecca Miller acted as financial advisors, and Cleary Gottlieb Steen & Hamilton LLP and Freshfields Bruckhaus Deringer LLP provided legal advice to FEMSA in connection with this transaction.

FEMSA will host a conference call today, Monday, January 11, 2010 at 8:30 AM Eastern Time (7:30 AM Mexico City Time) to discuss the transaction, followed by a question and answer session. To participate in the call, please dial Domestic US: (1 888)-600-4871 or International: (1 913)-312-1491. The conference call will be webcast live through streaming audio in www.femsa.com/investor.

A presentation related to the transaction will be posted on our website at http://ir.femsa.com/events.cfm ahead of the conference call.

FEMSA is the leading beverage company in Latin America. It controls a platform that comprises Coca-Cola FEMSA, the largest Coca-Cola bottler in the region; FEMSA Cerveza, one of the leading brewers in Mexico, with presence in Brazil, and an important beer exporter to the United States and other countries; and Oxxo, the largest and fastest growing convenience store chain in Mexico with over 7,300 stores.

SOURCE FEMSA