After revealing plans to sell in October, three brewers reportedly are vying to buy Mexico's FEMSA Cervesa

By David Jones
Reuters

Three brewers are interested in buying Mexico's FEMSA Cerveza in a $7.5 billion plus auction, with SABMiller the frontrunner in a deal likely to be sealed in January, sources close to the situation said Friday.

Europe-based brewers SABMiller and Heineken are both keen to buy one of the last big emerging-market brewers, while Japan's largest brewer, Kirin Holdings Co., has asked for details on the brewer, which was effectively put up for sale last month.

"There are three groups looking at FEMSA. SABMiller and Heineken are in deep discussions, while Kirin has shown some interest," said one source with knowledge of the situation.

American brewer Molson Coors looked at FEMSA's beer operations but backed away, largely reflecting the big loss it made buying Brazilian brewer Kaiser in 2002 then selling it to FEMSA in 2006, the sources said.

In early October, FEMSA said it was in talks with several parties to explore opportunities involving its beer business, and FEMSA's controlling family shareholders have already held talks with SABMiller, according to sources.

All parties declined comment on the matter.

The main stumbling block appears to be price, with FEMSA looking for $9 billion for its beer business while the Miller Lite and Peroni brewer SABMiller and some analysts see a more realistic price around $7.5 billion.

FEMSA Cerveza has operations in two of the world's six biggest beer markets, being the No. 2 player in the Mexican beer market with a share of 42 percent and No. 4 player in Brazil with a relatively small share of around 7 percent.

The so-called FEMSA families own nearly 39 percent of the FEMSA group which owns brewing, soft drinks and retailing interests and controls 75 percent of the voting share, so is key in any talks, and sources say they are looking for a stake in an enlarged group to keep an interest in the beer industry.

www.reuters.com/article/asiaMergersNews/idUSGEE5AQ1X520091127