Heineken to acquire FEMSA Beer Business

Amsterdam 11 January 2010 - Heineken N.V. ("Heineken") today announced it will create a major new platform for growth by acquiring the beer operations of Fomento Económico Mexicano, S.A.B. de C.V ("FEMSA") via an all share transaction (the "Transaction").  Heineken will acquire FEMSA Cerveza, comprising 100% of FEMSA's Mexican beer operations (including its US and other export business) and the remaining 83% of FEMSA's Brazilian beer business that Heineken does not currently own. As a result of the Transaction, FEMSA will hold a 20.0% economic interest in the Heineken Group (with shareholdings at both Heineken and Heineken Holding N.V. ("Heineken Holding")). A portion of the Heineken shares allotted to FEMSA will be delivered over a period of not more than five years (the "Allotted Shares").  FEMSA will have the right to appoint two non executive representatives to the Supervisory Board of Heineken, one of whom will be a Vice Chairman of the Heineken N.V. Supervisory Board and will also be appointed to the Board of Directors of Heineken Holding.  Heineken Holding will maintain its 50.005% stake in Heineken N.V. Based upon the Heineken N.V share price of ?32.925, as at 8 January 2010, the implied equity value of FEMSA Cerveza is ?3.8 billion (USD5.5 billion).  Including net debt and pension obligations of USD2.1 billion (?1.5 billion), the total implied enterprise value for FEMSA Cerveza is approximately ?5.3 billion (USD7.6 billion). Compelling Strategic Transaction The acquisition delivers compelling strategic benefits globally and transforms Heineken's presence in the Americas.  In particular it: * provides a unique opportunity to drive growth in three of the world's four biggest beer profit pools by: * * accessing both value and volume growth in Mexico, the world's fourth largest beer profit pool; * strengthening Heineken's leading position in the highly profitable import and growing Hispanic segments in the USA, the world's most profitable beer market; and * providing the opportunity to build value in Brazil, the world's second largest beer profit pool; * offers significant scope to accelerate the growth of the Heineken brand in the premium segment in both Mexico and Brazil using FEMSA Cerveza's established route to market; * strengthens Heineken's leading international portfolio with the addition of the Dos Equis, Tecate and Sol brands; * gives Heineken access to strong revenues and cashflows, consolidating its position as the world's second largest brewer by revenue (?16.7 billion); and * further builds Heineken's exposure to growth from developing markets. Financial Highlights Annual cost synergies and savings to be achieved through operating best practices are expected to reach ?150 million by 2013.  Heineken also expects revenue enhancement initiatives to deliver substantial earnings improvement over a similar period and in the longer term. The Transaction is expected to be earnings per share accretive after two years and to deliver positive economic profit after six years. The all share nature of the deal allows Heineken to maintain a robust financial position, supported by strong cash flow generation.  Heineken's net debt/EBITDA ratio as at 30 June 2009, proforma for the Transaction, remains largely unchanged at 3.1 times. Share Transaction and Governance Following completion of the Transaction and delivery of the Allotted Shares, FEMSA will be the second largest shareholder in the Heineken Group, holding 12.5% of Heineken and 14.9% of Heineken Holding, which together represent a 20.0% economic interest in the Heineken Group. FEMSA will be given the right to appoint two non executive representatives to the Supervisory Board of Heineken and one of these representatives will also be appointed to the Board of Directors of Heineken Holding. FEMSA, Heineken and Heineken Holding have agreed to enter into a Corporate Governance Agreement establishing the relationship between the partners in the future, including board representation as well as customary lock-up and standstill provisions. Timing The Transaction is expected to close in the second quarter of 2010 and is subject to the customary approval of the relevant regulatory authorities and the approval of the shareholders of Heineken, Heineken Holding and FEMSA. Heineken Holding, the controlling shareholder of Heineken, has committed to vote in favour of the proposed transaction as has L'Arche Green N.V., the controlling shareholder of Heineken Holding, at the respective shareholder meetings.  In addition, the Voting Trust which controls 39% of FEMSA has entered into an undertaking to vote in favour of the Transaction at the FEMSA shareholder meeting. Commenting on the Transaction, Jean-François 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." Commenting on the Transaction, José Antonio Fernández Carbajal, Chairman of the Board and CEO of FEMSA said: "We are enthusiastic about this transaction, which allows 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. It enables us to unlock the significant value that we have created during the past decade, while also allowing 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, this transaction 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". A conference call for analysts and investors will start at 11:00 CET today and will be broadcast live via the website. The presentation can be monitored live onwww.heinekeninternational.com, from which it can be downloaded afterwards. Press enquiries Véronique Schyns Tel: +31 (0)20 5239 355 veronique.schyns@heineken.com Financial Dynamics Charlie Armitstead Tel: +44 207 269 7176 / +44 7703 330 269 charles.armitstead@fd.com Investor and analyst enquiries Jan van de Merbel Tel: +31 (0)20 5239 590 investors@heineken.com Editorial information: Heineken N.V. is one of the world's great brewers and is committed to growth and remaining independent. The brand that bears the founder's family name - Heineken - is available in almost every country on the globe and is the world's most valuable international premium beer brand.  The company's aim is to be a leading brewer in each of the markets in which we operate and to have the world's most prominent brand portfolio. In 2008, the Company operated 125 breweries in more than 70 countries and sold 162 million hectolitres of beer. Heineken is Europe's largest brewer and the world's third largest by volume. Heineken is committed to the responsible marketing and consumption of its more than 200 international premium, regional, local and specialty beers and ciders.  These include Amstel, Birra Moretti, Cruzcampo, Foster's, Maes, Murphy's, Newcastle Brown Ale, Ochota, Primus, Sagres, Star, Strongbow, Tiger and Zywiec. In 2008, revenue totalled EUR14.3 billion and Net Profit before exceptional items and amortisation was EUR1.0 billion. In 2008, the average number of people employed was 56,208. Heineken N.V. and Heineken Holding N.V. shares are listed on the Amsterdam stock exchange. Prices for the ordinary shares may be accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on the Reuter Equities 2000 Service under HEIN.AS and HEIO.AS. Additional information is available on Heineken's home page:http://www.heinekeninternational.com . [HUG#1371950] Download complete press release Heineken N.V. here: http://hugin.info/130667/R/1371950/335927.pdf