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* SABMiller, Heineken, Kirin interested in FEMSA Cerveza

* SABMiller seen as front runner

* Deal seen completed in January 2010

(Adds further details and background)

By David Jones

LONDON, Nov 27 (Reuters) – Three brewers are interested in
buying Mexico’s FEMSA Cerveza in a $7.5 billion plus auction,
with SABMiller (SAB.L) the front runner in a deal likely to be
sealed in January, sources close to the situation said Friday.

Europe-based brewers SABMiller and Heineken (HEIN.AS) are
both keen to buy one of the last big emerging market brewers,
while Japan’s largest brewer, Kirin Holdings Co (2503.T), has
asked for details on the brewer, which was effectively put up
for sale last month.

“There are three groups looking at FEMSA. SABMiller and
Heineken are in deep discussions, while Kirin has shown some
interest,” said one source with knowledge of the situation.

American brewer Molson Coors (TAP.N) looked at FEMSA’s beer
operations but has backed away, largely reflecting the big loss
it made buying Brazilian brewer Kaiser in 2002 then selling it
to FEMSA in 2006, the sources said.

In early October, FEMSA (FMSAUBD.MX)(FMX.N) said it was in
talks with several parties to explore opportunities involving
its beer business, and FEMSA’s controlling family shareholders
have already held talks with SABMiller, according to sources.

All parties declined comment on the matter.

FEMSA Cerveza has operations in two of the world’s six
biggest beer markets, being the No 2 player in the Mexican beer
market with a share of 42 percent and No 4 player in Brazil with
a relatively small share of around 7 percent.

“SABMiller is clearly the front runner, but Heineken is very
determined not to lose out to SABMiller as it did in 2005 with
Bavaria,” said another source.

London-based SABMiller is a big emerging market player, with
90 percent of its earnings coming from these growth markets, and
it showed its ability to do big share-based deals when it bought
Colombia’s Bavaria in 2005 for $7.8 billion, giving the San
Domingo family owners 15 percent of an enlarged group.

The so-called FEMSA families own nearly 39 percent of the
FEMSA group which owns brewing, soft drinks and retailing
interests and controls 75 percent of the voting share, so is key
in any talks, and sources say they are looking for a stake in an
enlarged group to keep an interest in the beer industry.

Amsterdam-based Heineken is very keen to do a deal and has
close links with FEMSA as it has a deal to distribute its beers
such as Sol and Tecate in the U.S. up to 2017, but analysts
question whether it can afford a deal with its current debts and
with the Heineken family still keen to stay firmly in control.  Continued…