Coca-Cola FEMSA and Grupo Fomento Queretano reach an agreement to merge their bottling operations

Mexico City, Mexico – December 15, 2011 – Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOFL; NYSE: KOF) (“Coca-Cola FEMSA,” “KOF,” or the “Company”) , the largest public bottler of Coca-Cola products in the world, and Grupo Fomento Queretano and its shareholders (“Grupo Fomento Queretano”), a diversified group with divisions in beverages, retail, services, real estate, and tourism, have agreed to merge Grupo Fomento Queretano’s beverage division, one of the oldest family-owned beverage players in Mexico, with Coca-Cola FEMSA. 

The merger agreement has been approved by both Coca-Cola FEMSA’s and Grupo Fomento Queretano’s Boards of Directors and is subject to the completion of confirmatory legal, financial, and operating due diligence and to customary regulatory and corporate approvals, including the approval of The Coca-Cola Company and the Comisión Federal de Competencia, the Mexican antitrust authority. Both Coca-Cola FEMSA and Grupo Fomento Queretano will call for an extraordinary shareholders meeting for the approval of this merger.

The aggregate enterprise value of this transaction is Ps. 6,600 million. As a result of the merger, Grupo Fomento Queretano will receive 45.1 million newly issued KOF series L shares at a value of Ps. 119.29 per share, calculated on the average closing price of the KOF series L share over the 5 trading days of the week prior to the announcement of this agreement. The number of shares may be adjusted within agreed upon thresholds, pending the completion of the due diligence process. In addition, Coca-Cola FEMSA will assume Ps. 1,221 million in net debt.

Furthermore, through this transaction, Coca-Cola FEMSA will become the owner of a 12.92% stake in Promotora Industrial Azucarera, S.A. de C.V. (“PIASA”), a participant in the Mexican sugar industry.

“As we find ourselves at the best moment in the history of our company, we have decided to merge the beverage division with Coca-Cola FEMSA, the largest Coca-Cola bottler in the world, with a diversified geographic presence, a talented management team, and important growth prospects. We are certain that, together, we can combine the best practices and talent that we have developed at Grupo Fomento Queretano with the expertise and track record of Coca-Cola FEMSA. The combination of both groups, the closeness of our territories, and the best practices we will share will contribute to the creation of value for all shareholders. We are ready to continue writing history and building on what we started nearly a century ago,” said the shareholders of Grupo Fomento Queretano.

“As we are about to close a meaningful year for our Company and the Mexican Coca-Cola bottling system, we are pleased to announce our third merger agreement in less than six months. We feel happy to join forces with the major controlling shareholders of Grupo Fomento Queretano to integrate their beverage division with Coca-Cola FEMSA. We continue to show flexibility to invite new partners with whom we share an aligned vision of economic and social value creation. We feel honored to receive the Ruiz family on our team and, together, leverage our expertise in the beverage industry and complement our prospects for future growth.  Particularly, the three mergers that we have announced this year will add to our Mexican operations more than 425 million unit cases of beverages and more than Ps. 12 billion in revenues, representing approximately a 30% increase for our Mexican operations’ volumes and revenues", said Carlos Salazar Lomelin, Chief Executive Officer of the Company.

“We are very proud of the work that Coca-Cola FEMSA’s team has performed this year. For Coca-Cola FEMSA, 2011 marks a historic year in which we firmly advanced on our strategy to grow through mergers and acquisitions: from our incursion in the dairy segment through Estrella Azul in Panama, together with The Coca-Cola Company, to our mergers with the beverage divisions of Grupo Tampico, Grupo CIMSA, and Grupo Fomento Queretano. Through these mergers, we also have the privilege to enrich our organization with the track record and entrepreneurial legacy of three Mexican families with whom we identify in our principles and values.  The aggregate value of these transactions is more than Ps. 28 billion, which represents a record investment for our Company since the acquisition of Panamco in 2003,” said José Antonio Fernández Carbajal, Chairman of the Board of Directors of Coca-Cola FEMSA.