January 11/Amsterdam/Associated Press Financial Wire -- Dutch brewer Heineken NV said it will buy the beer-making operations of Mexico's Femsa in an all-share deal that values the maker of Dos Equis, Tecate and Sol beers at $5.5 billion, excluding debt.

The buy increases Amsterdam, Netherlands-based Heineken's presence in growth markets and cements its position as the world's second-largest brewer by sales. It also continues a decade-long trend toward concentration among the biggest players in the global beer market.

Femsa Cerveza brands have a 43% market share in Mexico and a 9% share in Brazil two of the world's top four most profitable beer markets, and both still fast-growing. Femsa's Tecate and Dos Equis brands are also significant players in the U.S. imported beer market, where Heineken vies with Grupo Modelo's Corona.

"This is a really good deal for Heineken, for our position in the Americas," said Heineken chief executive officer Jean-Francois van Boxmeer on a conference call. "As a worldwide brewer, this was a (region) where we perhaps were weaker."

Femsa Cerveza had sales of 2.6 billion euros ($3.8 billion) and operating profits of 618 million euros in 2008, Heineken said. Including debt that Heineken will assume, the deal is worth $7.6 billion (5.3 billion euros).

Analysts welcomed the buy as a pleasant surprise, given that many had expected SABMiller PLC now the world's third-largest brewer by sales behind Anheuser-Busch InBev SA and Heineken to win the race for Femsa.

Analyst Kris Kippers of Petercam Bank praised the deal as a "a great acquisition for Heineken" because Femsa was one of the few remaining large independent brewers in growth markets and Heineken did not overpay. Heineken now has 40% of its operations in developing markets, up from 32%.

From the January 18, 2010, Prepared Foods E-dition