Mexico City, Oct 2 - News of a possible sale of FEMSA's beer business lifted its stock for a second day on Friday, while rival Grupo Modelo surged on bets it could also benefit as global companies absorb Mexico's top beer makers.
FEMSA's Mexico-traded shares jumped 8.18 percent to a record high of 62.53 pesos following a surge of more than 12 percent late Thursday, while Modelo's shares climbed 7.77 percent to 57.95 pesos, their highest level in more than two years.
Following a Wall Street Journal report that FEMSA may sell its beer business, the company confirmed it has held talks with several parties to explore opportunities.
"We think the message is clear: FEMSA Cerveza is for sale, and the negotiation is now down to a matter of price," UBS said in a report, estimating that a fair price would be $7.5 billion.
A deal with FEMSA could give an international player access to one of the region's most lucrative beer markets and create a formidable challenge to Modelo, maker of the Corona brand.
Analysts said Mexico could shape up to be a battleground for international beer brewers.
AB InBev owns half of No. 1 Mexican beer company Modelo, and analysts said it could make a move to buy the rest of the company.
Modelo filed for arbitration against InBev last year, claiming it was not consulted about Inbev's takeover of Anheuser, which owned 50 percent of Modelo.
"A potential deal around FEMSA logically implies a greater likelihood of consolidation moves, and the arbitration with AB InBev could play a key role in unlocking this potential," wrote Barclays analyst David Belaunde in a note to clients.
The merger and acquisition fever could spread beyond the beverage business, one trader said.
"This creates more certainty about what could happen with stocks in other potentially attractive sectors," said Adolfo Lazaro, a trader at Bulltick Capital Markets in Mexico City.
Lazaro pointed to the telecommunications sector in particular.
President Felipe Calderon wants Congress to pass legislation to allow foreign players to participate in the fixed-line telephone business.
If the legislation is approved, analysts believe Spain's Telefonica could make a bid for telecommunications provider Axtel, whose stock edged up 0.31 percent to 9.68 pesos.