Summary
FEMSA remains a misunderstood asset in the global consolidation of the beer industry.
A transaction will involve numerous strategic considerations and
will depend upon several key factors involving acquirers' balance sheets and plans for development.
Analysis
The strategic values attaching to a merger with Heineken and SABMiller are distinctly different and divergent. Negotiations with FEMSA will draw scrutiny and very possibly competitive interest from Diageo, Kirin and Carlsberg. Transaction valuations for each must be assessed in line with current market dynamics, particularly in North and Latin America, but also anticipated related acquisitions. FEMSA is in a position to enhance contemplated premiums. Regulatory and antitrust issues are a factor in assessing potential suitors. A FEMSA merger will have an effect on both SABMiller's and ABI's valuations. (The dynamics of SABMiller are beginning to resemble those of Pernod Ricard?)
Tom Pirko consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
