Femsa to Sell Heineken Stake, Other Noncore Assets, Preannounced in Line Q4; Shares Fairly Valued

We applaud the clarity and decisiveness with which narrow-moat Femsa unveiled its plan to focus on long-term strategic priorities in retail and beverage bottling and divest all noncore assets over the next 24 to 36 months, including its 15% stake in narrow-moat Heineken (valued at $8.5 billion) and the Envoy distribution business. Within a day of the announcement, Femsa representatives had resigned from the Heineken board, and the firm had initiated on an equity and exchangeable bond sale that will reduce its stake in the brewer to 8%. Following all divestitures, the simplified operating structure will include only wide-moat Coke Femsa and Femsa retail making up 32% and 68% of operating profits, respectively.