Heineken's deal for FICO is expected to boost its LatAm footprint and growth profile

[San Jose pinned on a map of America]
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Heineken (OTCQX:HEINY [https://seekingalpha.com/symbol/HEINY]) announced earlier in the week that it will acquire 100% of FIFCO's beverage and retail business for $2.3 billion. The transaction continues a partnership from 1986, strengthened in 2002 when a 25% stake in FIFCO’s beverage business in Costa Rica was acquired. The deal is expected to be completed in the first half of 2026.

Of note, FIFCO is the market leader in Costa Rica with 75% volume share in the beer category, per Euromonitor. In Panama, Heineken is the number two player with a 45% share. Heineken (HENIY) management expects the deal to be accretive for margins and EPS after closing.

Weighing in on the deal, HSBC analyst Carlos Laboy said Heineken can improve the operation since per capita consumption of beer in Costa Rica is half of Mexico. "Better revenue management is on the agenda, perhaps by emphasizing more refillable bottle segmentation and strengthening the core-plus and high-end portfolio with Amstel, Mexican brands, Heineken, and craft beers," he highlighted.

Laboy also noted that unlike Heineken's (OTCQX:HEINY [https://seekingalpha.com/symbol/HEINY]) complex and time-consuming deal with Distell and NBL in South Africa in 2023, this deal seems simpler and should be faster to complete.

HSBC kept a Buy rating on Heineken (OTCQX:HEINY [https://seekingalpha.com/symbol/HEINY]). Laboy and his team like the consumer-centric model and overarching strategy. "With rising concerns of slowing organic volume growth and margin expansion in Europe, this deal strikes us as constructive. Heineken's net debt is expected to increase by EUR3.2bn, implying a c30bp increase in its leverage (net debt/EBITDA) ratio," he wrote. Looking ahead, Heineken (OTCQX:HEINY [https://seekingalpha.com/symbol/HEINY]) is seen as still having enough balance sheet flexibility for further M&A if some of its other minority interests need to be similarly stepped up into control stakes in markets like Chile, Argentina, and Colombia.

MORE ON HEINEKEN N.V.

* Heineken N.V. (HEIA:CA) FIFCO Transaction Call (Transcript) [https://seekingalpha.com/article/4825140-heineken-n-v-heia-ca-fifco-transaction-call-transcript]
* Historical earnings data for Heineken N.V. [https://seekingalpha.com/symbol/HEIA:CA/earnings]
* Financial information for Heineken N.V. [https://seekingalpha.com/symbol/HEIA:CA/income-statement]