Mexican Coca Cola bottler Femsa acquires Brazil’s Coca-Cola Company distributor in $448m deal

Coca-Cola Femsa SAB de CV (MXK:KOFL), the bottler of Coca Cola in Mexico, said it would take over Brazilian Companhia Fluminense de Refrigerantes for an enterprise value of USD448m (EUR344m).

Companhia Fluminense, set up 64 years ago, produces and distributes soft drinks licensed from The Coca-Cola Company (NYSE:KO), as well as beer.
The deal, cleared by Coca-Cola FEMSA’s board, needs approval from the Brazilian antitrust authority and The Coca-Cola Company, the buyer said.

The move, in line with Coca-Cola FEMSA’s plan to focus on opportunities on the Latin American Coca-Cola bottling system sector, adds to the buyer’s footprint in the strategically important Brazilian market, allowing for significant synergies to be achieved, it said.

The Companhia Fluminense franchise, with 2,000 employees at one bottling facility and four distribution centres, covers parts of Brazilian states Minas Gerais, Rio de Janeiro and Sao Paulo serving 141 cities. It generated net revenues of some USD232m in the year to 31 March 2013.

Tobacco group Philip Morris to take full control of Mexican arm in $700m deal

US tobacco group Philip Morris International Inc (NYSE:PM), or PMI, said it will take full control of its Mexican unit through the purchase of the remaining 20% in Philip Morris Mexico SA de CV (PMM) from Grupo Carso SAB de CV (OTCMKTS:GPOVY).

PMI, who worked in partnership with Grupo Carso in Mexico for more than 30 years, said the final price, estimated at some USD700m (EUR542.3m), will be calculated based on a pre-agreed formula and will be subject to adjustments based on the unit’s future performance for two fiscal years after the closing of the transaction.

The maker of top cigarette brand Marlboro expects to complete the deal by 30 September 2013, anticipating it to contribute to its EPS from the fourth quarter of this year, it said.

Philip Morris claims a 73.5% share of Mexico’s tax-paid cigarette market for 2012, when its flagship brand Marlboro led the market with a 53.6% share.

Japan’s Mitsui acquire 50% of $400m wind power project in Mexico

Japanese diversified trading firm Mitsui & Company Ltd (TYO:8031) said it would buy a 50% interest in French renewable energy company EDF Energies Nouvelles SA’s Eoliatec del Istmo SAPI de CV, which owns the Bii Stinu Wind Project in Mexico.

In particular, Mitsui will buy the stake via its newly set-up unit MIT Renewables Mexico SAPI de CV under an agreement with EDF Energies Nouvelles’ subsidiary EDF EN Mexico S de RL de CV.

The project, with a total cost of some MXN5.1bn (USD399m/EUR305m), is located in Oaxaca, Mexico and has capacity of 164MW. It is still under construction and is slated to start commercial operation in June 2013 to provide energy to five major corporations under 15-year power purchase accords, Mitsui noted.

Through the deal, Mitsui will reach participation in 2,922MW of gross generation capacity in Mexico, it said.

America Movil’s secures a 21% stake in Dutch KPN

Mexican telecommunications group America Movil SAB de CV (NYSE:AMX) announced it had reached a 20.92% ownership level in Royal KPN NV (AMS:KPN) after buying further shares of the Dutch telecommunications and ICT services provider in a number of transactions.

Following these deals, including 27 transactions outside regular market trading, AMX holds 299.52m KPN ordinary shares, the buyer said. The Mexican group paid prices ranging from EUR7.51 (USD9.44) to EUR7.70 a share for the additional KPN stock, it said.

AMX is carrying out a EUR8.00 per share partial offer aimed at securing a stake of 27.7% in KPN. The company, which held 4.8% in KPN before launching the partial offer on 30 May, said the EUR2.6bn bid would stay open for acceptance until 27 June, unless extended.

With this move, the Mexican telecom wants to expand outside the Americas, betting on geographic diversification as key to its growth after it had so far provided it with increased profit and cash flow stability as well as strong ratings, it has said.

Meanwhile, KPN’s management and supervisory boards, reiterated their advice to shareholders against the offer which they deemed opportunistic and undervaluing the company’s potential.

As alternative to the bid, the boards looked into options to sell German mobile business E-Plus and create shareholder value superior to AMX’ offer. This process, however, failed to lead to a deal, with KNP blaming the outcome on “adverse” financial markets conditions. However, KPN said the process had revealed potential significant synergy value via in-country consolidation in Germany.

The Dutch group also plans to start in July the sale of its KPN Group Belgium (BASE) unit, after completing the review of this business, saying it would use the funds from the sale to boost its credit profile and financial position.

For AMX, this is its largest investment in Europe so far, it has said, adding it would use own cash resources to finance it.

For more on AMX’s stakebuilding in KPN, click here.

Mexico’s America Movil continues building a stake in Dutch KPN

Mexican telecommunications group America Movil SAB de CV (NYSE:AMX) said it had bought further 3.7m shares of Royal KPN NV (AMS:KPN) in a transaction outside regular market trading and raised its stake in the Dutch telecommunications and ICT services provider to 8.12%.

The additional stock was bought at a price per share of EUR7.90 (USD9.95), AMX said.

The Mexican group is currently carrying out a EUR2.6bn partial offer aimed at increasing its KPN stake to 27.7%. AMX, which had 4.8% in KPN before launching the partial offer on 30 May, has said that the EUR8.00 a share bid will run until 27 June, unless extended.

AMX is using this deal to expand outside the Americas, as it views geographic diversification to be key to its growth after it had so far provided it with increased profit and cash flow stability as well as strong ratings, it has said.

KPN’s management and supervisory boards, however, deemed the offer opportunistic and undervaluing the company’s potential and had advised shareholders not to tender their stock to it.

Arguing against the offer, the boards said that it fails to reflect the value derived from KPN’s current transition of its Dutch business and its profitable growth in Germany and Belgium.

As an alternative, the Dutch group’s boards have proposed to start a strategic review of the company’s German business E-Plus in addition to the ongoing review of its Belgian mobile operations, as they expect such a move to unlock superior value for shareholders.

The deal is AMX’s largest investment in Europe so far, it has said, adding it would use own cash resources to finance a deal.

For more on this story, click here.

Mexicana Airlines Has Filed for Bankruptcy

Mexicana Airlines is BankruptMajor Mexican air carrier Mexicana Airlines has filed for bankruptcy following years of financial worry. The airline, the largest in Mexico, has struggled with expenses and low operating income for the better part of a decade. After failing in negotiations to replace a number of employees with contracted workers, the company has filed for bankruptcy and will revise its business strategy.

However, the airline will continue operations over the next few weeks while revising the way it operates. Management plans to bring the airline’s expenses inline with those in other countries while increasing profits to acceptable levels. Financial analysts have blamed the airline’s poor financial performance on pricing errors and the demands of a largely unionised domestic workforce.

The airline had expanded rapidly throughout the 1990s, increasing its employee base and enjoying reasonable profits. But with the swine influenza outbreak and Mexico’s worsening border conflicts, demand for domestic and international travel has decreased significantly. Expenses for the airline remain high due to its large workforce, while union agreements have prevented downsizing.

The global airline industry has been hard hit throughout the economic crisis, with consumer flights seeing significantly less demand than they had previously. Business travellers have also decreased over the past five years, although recent economic recovery has seen an increase in the amount of businesspeople using premium airlines.

However, low-cost air carriers have demonstrated that there is potential for alternative business models in the air travel space. Ireland-based RyanAir and Malaysian AirAsia have both reported steady profits and operating income over last three years, capitalizing on the demand for discount flights and inexpensive international holidays.

Mexicana’s two sister airlines – MexicanaLink and MexicanaClick – will continue to operate as normal throughout the bankruptcy protection case, as both are independently owned and operated.