Mexico's Femsa says it's considering beer merger

[October 02, 2009]  MEXICO CITY (AP) -- Mexican brewer and beverage maker Femsa SAB is exploring merger possibilities involving its beer business in talks with several companies.

Femsa did not say what other companies are part of the talks, but the Wall Street Journal, citing people familiar with the matter, reported that Femsa has held discussions with beverage companies including SABMiller PLC and Heineken NV.

A deal could be valued at as much as $9 billion, according to the Journal.

"There can be no assurance that such discussions will lead to any definitive agreement," the Monterrey, Mexico-based company said in a brief statement.

Femsa's confirmation came after the Mexican Stock Exchange halted trading of its shares a half-hour before Thursday's close, pending information from the company "on relevant events."

After the Journal's report, Femsa UBD shares soared 12.5 percent Thursday to 57.80 pesos ($4.20).

Femsa, which makes Tecate, Sol and Dos Equis beers, is one of Latin America's biggest brewers and the main rival of Grupo Modelo, maker of Corona. Femsa is also the largest Coca-Cola bottler in Latin America.

The beer industry has been consolidating in recent years as it deals with rising costs and consumers spurning beer in favor of spirits and wine. Last year, St. Louis-based Anheuser-Busch, maker of top-selling Bud Light, sold itself for $52 billion to Belgium-based ImBev, creating the world's largest brewer.

Earlier in 2009, No. 2 U.S. brewer SABMiller joined its U.S. business with No.3 Molson Coors Brewing Co. to create MillerCoors, which has brands like Coors Light and Miller Lite.

In both deals, the companies cited saving on costs and streamlining operations as reasons for the pairings.

[Associated Press; By E. EDUARDO CASTILLO]

Associated Press writer Emily Fredrix in Milwaukee contributed to this report.

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