Heineken faces a new roadblock in its APB takeover bid

In Amsterdam they will be scratching their heads. Only days after Heineken’s takeover offer for Asia Pacific Breweries (APB), Kindest Place, a company controlled by Thai billionaire Charoen Sirivadhanabhakdi’s son-in-law, raised the stakes on 6 August 2012 by offering to buy the 7.3 percent of APB owned directly by Fraser & Neave (as opposed to shares owned in the joint venture with Heineken).

Kindest Place offered 55 Singapore dollars apiece for the stake, which is 10 percent more than Heineken’s 50 Singapore dollars (USD 40) offer for Fraser & Neave’s entire APB holding.

On 3 August 2012 the board of Fraser & Neave had recommended to shareholders that they should sell their APB shares (direct and indirect) to Heineken.

APB’s ownership structure is kind of complex. 64.8 percent is owned by the 50:50 joint venture between Fraser & Neave and Heineken, Heineken directly controls 9.5 percent, Fraser & Neave 7.3 percent and all others 18.4 percent.

Mr Sirivadhanabhakdi, the major shareholder in ThaiBev and brewer of Chang beer, already controls 26.2 percent of Fraser & Neave, and his interests there can put a severe kink in whether or not the sale to Heineken goes through.

Although it would be daft for shareholders to vote down the sale to a large multinational that could grow the company well, the extra 5 Singapore dollars could prove just enough, some observers say.

As pointed out by analysts, Heineken’s APB bid is already at a rich multiple of 17.4 times (EBITDA) core profits, above the 15.4 times paid by AB-InBev for Mexico’s Modelo in June.

So, the question is: will Heineken raise its already good offer, or will its reputation alone sway shareholders in its favour?