Heineken closer to deal with Fraser & Neave
Phew – no bidding war. After only two weeks of deliberations, on 3 August 2012 Fraser & Neave’s board of directors recommended Heineken’s USD 4.1 billion offer for its 40 percent stake in Asia Pacific Breweries (APB) to shareholders, the Amsterdam-based brewer said in a statement. Heineken already owns a 42 percent stake in APB.
Heineken was pushed into action to seek full control of Singapore-based APB following Thai Beverage’s bid for a 22 percent stake in Fraser & Neave (F&N) earlier in July. Thai Beverage, the brewer of Chang beer, is controlled by Thai billionaire Charoen Sirivadhanabhakdi. At the same time, a company owned by his son-in-law also acquired about 8.4 percent of APB, it was reported.
Analysts were relieved that Heineken was not forced to up its initial offer, which many believed was already very fair. Many had expected Heineken to raise its offer to secure control of APB, with which it has been involved since 1931 and through which it brews and distributes its brands in southeast Asia.
Heineken will make a mandatory general offer at the same price for all of the remaining shares of APB, once a final agreement with F&N’s shareholders has been reached, according to the statement. Heineken does not know yet when F&N’s Extraordinary General Meeting will take place.
Thai media say that the privatisation of APB will land Heineken with 24 breweries in 14 countries, including Singapore, China, Indonesia, Vietnam and Mongolia.
It will also raise Asia’s contribution to Heineken’s EBIT to 15 percent from currently 6 percent and finally free Heineken from the shackles imposed under the joint venture agreement.
It’s an open secret that Heineken has long wanted to grow its Asian business at a faster pace, especially in the world’s biggest beer market, China, than the Singaporeans were prepared to.
However, the deal still depends on how Thai Beverage will vote. Thai Beverage has since built its stake in F&N to 24.1 percent. Together with Japan’s brewer Kirin, which owns 14.9 percent in F&N, the two together hold almost 40 percent of F&N’s shares.
Bear in mind that, once APB is sold to Heineken, all that’s left of F&N will be its property portfolio and its dairy and soft drink business.
We at BRAUWELT International do not believe that Thai Beverage and Kirin acquired stakes in F&N on the off-chance that Heineken eventually would buy them out. To both of them, F&N and APB respectively are strategic investments.
Still, Kirin might be interested in going after F&N’s dairy and soft drinks business, maker of sports drink 100Plus and Farmhouse-branded milk, which may be worth as much as USD 3 billion, insiders say. The business is held under F&N Foods and Kuala Lumpur-listed Fraser & Neave Holdings Bhd, known as FNH.
As things stand, Heineken may succeed in clinching this deal but don’t bet on it yet.
