Heineken gets Asia Pacific Breweries in the end
The earth shook briefly on 28 September 2012 when Heineken’s executives dropped tons of worries, having received news that shareholders of Fraser & Neave (F&N), the Singaporean conglomerate that owns Asia Pacific Breweries (APB), had finally voted to approve the sale of the brewing unit to Heineken for a sweetened price of 53 Singapore dollars, or USD 43.24, for each share of APB the Dutch brewer did not already own.
After a two month battle with the Thai billionaire Charoen Sirivadhanabhakdi the Dutch probably know only too well how Carlsberg must have felt when they had their run-in with Mr Charoen a decade ago and were forced to beat a retreat with their tails between their legs: this Asian tycoon is not to be slighted. (see article “Carlsberg partners with Singha”).
Full control of APB will cost Heineken dearly: about USD 6.3 billion. The deal values APB at around USD 11 billion or 18 times EBITDA, media say.
After decades of often difficult negotiations with its Asian partner F&N, winning control of APB will allow Heineken to implement its own policies in crucial growth markets in developing Asia.
APB, which is listed in Singapore, operates 30 breweries across Asia, including in far-flung countries like Mongolia, Papua New Guinea and the Solomon Islands. Its brand portfolio includes Tiger beer and Bintang lager, although Heineken’s brands make up around 30 percent of APB’s sales by volume and around half its profits, it was reported.
Why Heineken did not make a move on APB sooner, only the Dutch will know. But when Mr Charoen steadily began building up his stake in F&N, Heineken’s executives knew they had to act. They did raise their offer once and in mid-August even got approval from F&N’s board for their offer. However, the outcome was still far from certain a few weeks ago as by that stage Mr Charoen had already increased his shareholding in F&N to over 30 percent, the critical threshold, at which he had to make a full offer for F&N. Which he did.
Throughout Mr Charoen’s cloak-and-dagger machinations Heineken basically had only two options: either to let the whole thing blow up and walk away from APB, or force Mr Charoen to compromise by making a full offer for F&N themselves. The agreement between Heineken and ThaiBev, which was signed a week before the crucial shareholder vote and which secured for Heineken Mr Charoen’s backing for the sale of APB, implied that the latter had seemed a genuine feasibility.
That’s why approval from shareholders of F&N, which has a wide range of businesses, including real estate and food and beverage, was ultimately a mere formality.
The Japanese brewer Kirin also owns a 15 percent stake in F&N. It has not stated whether it will sell to Mr Charoen.
A separate vote on 28 September shot down a proposal by F&N to pay 4 billion Singapore dollars, or USD 3.3 billion, to its shareholders, following the disposal of APB to Heineken. The cash distribution, part of a capital reduction plan, had been opposed by Mr Charoen.
Shareholders of F&N will still have to vote on whether to accept the offer from Mr Charoen of 8.8 billion Singapore dollars, or USD 7.2 billion, for the 69 percent of the conglomerate he does not already control. Mr Charoen’s company TCC Assets has set a deadline of 29 October 2012 for shareholders to decide on his offer.
