Notable Mergers and Acquisitions of the Day 1/11: Heineken/Femsa, HI/KTII, BRY, NM/NMM

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In a continuing trend of consolidation in the beer business, Heineken agreed to purchase the beer sector of Femsa for 3.8 billion euros ($5.44 billion) in what was a surprising conclusion to an auction for the Mexican Brewer.

The analysts and industry insiders had expected Britain's SABMiller PLC to purchase the beer operations of Femsa, which is also known as foment Economico Mexicano.

In total, including the net debt and pension obligations, the value of Femsa in the all-share deal is at 5.3 billion euros.

The move will give Heineken a larger presence in the key emerging markets as analysts cite this as the reason for the company making this move. Heineken’s flagship brand has been struggling in the U.S., the world’s largest beer market, but the deal to buy Femsa will allow for a larger market share.

“This is a compelling and significant development for Heineken which will transform our future in the Americas, offering opportunities for accelerating sales in the rapidly growing markets of Brazil and Mexico,” Heineken CEO Jean Francois van Boxmeer said.

The Femsa sale could help the brewer improve its market share in Mexico, where it has steadily lost ground to larger rival Grupo Model SAB in the past two decades.

The move will make Femsa the second largest shareholder of Heineken with a 20 percent total stake and will have the opportunity to appoint two nonexecutive representatives to the company’s board with one being appointed to the board of directors of Heineken Holding.

Smaller beer companies have had to find larger homes in a beer market that has seen a wave of consolidation that hit its peak with the $52 billion dollar deal of InBev buying Anheuser-Busch Cos in November 2008.
Hillenbrand, Inc. (NYSE: HI) and K-Tron International, Inc. (Nasdaq: KTII) have signed a definitive merger agreement providing for Hillenbrand's acquisition of K-Tron for $150 per share in cash.

This price represents a 32.1 percent premium over the closing price of K-Tron's stock on January 8, 2010.

Under the terms of the definitive merger agreement, a subsidiary of Hillenbrand will merge with and into K-Tron, with the shareholders of K-Tron receiving $150 per share in cash for their common stock. The closing of the merger is subject to customary terms and conditions, including shareholder approval and the expiration or termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act.

Hillenbrand expects to use cash on hand and proceeds from debt financing to fund the acquisition. The transaction is expected to be accretive to Hillenbrand's earnings per share in 2010, net of acquisition costs.
Berry Petroleum Company (NYSE: BRY) announced that it has entered into an agreement with a private seller to acquire their interests in producing properties principally in the Wolfberry trend in West Texas for approximately $126 million in cash. Berry's proved reserve estimates associated with the properties are 11.2 million barrels of oil equivalent (MMBOE), 92% of which are in the Wolfberry, 85% of which are oil reserves and 23% of which are proved developed reserves. In 2010, the acquisition is expected to add approximately thirteen hundred barrels of oil equivalent per day (MBOE/d) to Berry's production on a twelve month annual average. Berry has identified over 130 drilling locations in the Wolfberry trend targeting the Spraberry, Dean, Wolfcamp and Strawn formations.

Robert Heinemann, president and chief executive officer, stated, "This acquisition provides Berry with the opportunity to diversify its oil resources and add a high margin, scalable oil resource to our portfolio. We believe the Wolfberry is an excellent fit with Berry's engineering and execution competencies and complements our existing stable base of low geologic risk oil assets. We will be the operator of 70% of the acquired properties and plan to transition a new West Texas focused asset team over the coming months."

Berry is increasing its 2010 capital budget by an additional $30 million to range between $250 million and $290 million. The Company plans to drill approximately 27 wells on the Permian property and plans to fund the capital from internally generated cash flow. One rig is currently drilling and Berry expects the acquired properties to provide self-funded production growth over the coming years.

Berry expects its 2010 production to be between 32,250 and 33,000 BOED, an increase of 8% to 10% over 2009. In addition, Berry's production from oil assets is expected to grow 20% by year-end 2010 driven by Diatomite and Wolfberry development.

The effective date of the transaction is January 1, 2010. Closing is expected in March 2010. The transaction is subject to customary closing conditions.
Navios Maritime Holdings Inc. (NYSE: NM) announced today that on January 8, 2010, it has sold the Navios Hyperion, a 2004 Japanese-built Panamax vessel with a capacity of 75,707 dwt to Navios Maritime Partners L.P. (NYSE: NMM) for $63.0 million in cash.

Navios Hyperion has been chartered out at a net rate of $32,300 per day until February 2010 and $37,953 per day until April 2014.

Navios Holdings intends to use the proceeds from the sale of this vessel for operating purposes, such as repayment of indebtedness or reinvestment in vessels.