Foster’s sells breweries in Vietnam
Foster’s fire sale of assets continued with the most recent sale of its two Vietnamese breweries to Asia Pacific Breweries (APB) for USD 105 million and its business in India to SABMiller for USD 120 million. The sale marks the group’s exit not only from loss making operations but also from brewing in the Asian region.
Foster’s Group CEO Trevor O’Hoy was quoted as saying: “Over the last four months, we’ve unlocked more than one billion dollar [Australian] through the sale of the Foster’s brand in Europe to Scottish & Newcastle, the sale of our brewing business in China to Suntory Limited and now the divestment of our remaining Asian brewing businesses.”
In the first of these transactions, Foster’s said it would sell its breweries in Da Nang in central Vietnam and Tien Giang (in the Mekong delta and close to Ho Chi Minh City), as well as associated local brands, to APB, and enter into a licence agreement for the Foster’s brand at a market royalty rate and for a finite term. Foster’s Group said it would retain ownership of the brand, and provide brand management and technical support to APB. In addition to producing and distributing Foster’s under licence in Vietnam, APB would also produce Foster’s for export across Asia.
The Vietnamese beer market seems to be a tough one for foreign brewers as Foster’s is not the first one to initiate a fire sale. It was the Frenchman Pierre Castel who originally owned the breweries in Vietnam and was glad that Foster’s took them off his hands after his business had floundered in the early 1990s. Now APB will have a chance to try its luck. APB is a subsidiary of a 50/50 joint-venture between Heineken and Singapore-based Fraser & Neave Ltd. Due to Heineken’s 50 percent share in the joint-venture, Heineken’s financial concern for the acquisition in Vietnam deal is limited to USD 52 million, a spokesperson for the brewer said. The additional capacities of the Da Nang (850 000 hl) and Tien Giang (650 000 hl) breweries will give a substantial boost to APB’s current production capacities in Ho Chi Minh City (2.3 million hl) and Hatay (300 000 hl) in northern Vietnam.
APB now owns interests in 29 breweries in ten countries in the Asia Pacific region. In China APB says it has 12 breweries. By the end of 2007 APB will have finished the construction of a brewery in Laos and commissioned a brewery in Mongolia, thus completing its presence within the Indochina region.
Under the second transaction, Foster’s Group said it would sell its brewing business in Aurangabad, India, and associated local brands as well as the Foster’s brand in India, to SABMiller. The transactions are set for completion during September 2006.
