Heineken sells asset to Crown Holdings

Jose Castro – Fourth Estate Cooperative Contributor

Amsterdam, Netherlands (4E) – Heineken, the Dutch brewing giant, announced Monday that an agreement was forged to sell its Mexican packaging operations to Crown Holdings Inc. The deal is expected to be worth USD1.2 billion.

The object of the sale is Empaque and this sale is but a part of the overall plan to focus on brewing as well as marketing its brews. This would be removing non-core businesses allowing for further financial flexibility for the company in the years to come. Amongst those known brands are Heineken, Dos Equis, Sol and Amstel.

The company is based out of Monterray, Mexico. Its main production items are metal beverage cans, glass bottles and other parts in the beverage packaging business. The employee headcount is 1,500 located in facilities throughout Mexico.

Heineken acquired Empaque when it purchased Femsa Cerveza back in 2010. The said sale would allow for an after tax gain of EUR300 million for the Dutch brewery company. The transaction is an all cash transaction and is projected to be completed within the year.

Heineken said, “Divesting the Empaque packaging operations will allow Heineken to focus its resources fully on brewing, marketing and selling its portfolio of beer brands. This transaction will allow us to expand our presence in the growing Mexican market, significantly strengthen our global beverage packaging business and deliver compelling benefits to shareholders.”

In last month’s report, Heineken expected a profit of EUR1.45 billion compared to EUR1.33 billion last year.

The sale would retain Empaque in its current state, still working on Heineken long term packaging requirements. They would also retain Cuauhtemoc Moctezuma, the subsidiary of Heineken in Mexico.

This purchase in turn would add between USD0.15 and USD0.20 per share to the earnings before merger related cost savings and revenue gains including adjustments, estimated amortization and depreciation. The transaction is still subject to regulatory approval.

The advisers for Heineken were Moelis & Co and Gibson Dunn & Crutcher. Crown Holdings on the other hand was advised by Citigroup.

In a statement, Heineken Chairman and CEO Francois van Boxmeer said, “We are confident that Empaque will flourish under its new ownership and we look forward to our ongoing partnership.”

For its part, Crown Holdings, previously known as Crown Cork and Seal, has grown to become one of the foremost packaging companies. Based out Philadelphia, PA has an employee roster of 21,300 operating in 40 countries. In 2013, the company earned revenues of USD8.7 billion.

Crown Holdings Inc CEO John Conway said to Wall Street Journal said, “This transaction will allow us to expand our presence in the growing Mexican market, significantly strengthen our global beverage packaging business and deliver compelling benefits to shareholders.”

Share prices of Heineken increased to EUR58.12 in morning trading at the Dutch bourse. On the other hand, Crown Holdings had declined by at least 1% to USD48.27 in New York. According to a report from the Financial Times, 12 month price targets done by 25 analysts for Heineken NV have set a median target of EUR59.00, with a high of EUR69.00 and low of EUR47.00.

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