Heineken, ThaiBev and Kirin in Asia Pacific Breweries threesome?
Heineken’s USD 4.1 billion offer to buy Singapore’s Fraser & Neave (F&N) out of the Asia Pacific Breweries (APB) joint venture altogether may have been fired from the hip, but what could they do?
Heineken’s offer came on 20 July 2012 after Oversea-Chinese Banking Corporation and its affiliated groups agreed to sell their stakes in F&N and APB for USD 3 billion to companies linked to billionaire and founder of Thai Beverage (ThaiBev), Mr Charoen Sirivadhanabhakdi. ThaiBev, which is Thailand’s largest brewer (Chang beer) and distiller, with 18 distilleries in Thailand, five in Scotland and one in China, plus three breweries and seven soft drink plants in Thailand, has since moved to raise its stake in F&N to 23.9 percent from 22 percent.
F&N and Heineken have a joint venture which owns a majority stake in APB, the brewer of Tiger beer. This has made things a tad uncomfortable for Heineken as Japan’s Kirin also has a 15 percent stake in F&N, which it bought in 2010 for USD 1 billion.
Given the importance of APB to F&N’s business, and ThaiBev’s ambitions to grow its business in Southeast Asia through the acquisition, Heineken faces an uphill battle if it wants to take control of APB, media say.
Whichever way the tussle for control of APB plays out, one thing is certain: all contenders will have to pay a strategic price, read loads of money.
Heineken’s offer is worth USD 4.1 billion (at a 45 percent premium to the average price of APB shares in the past month, says Heineken) and would give it about an 82 percent stake in APB. If the offer is accepted, Heineken would spend a further USD 2.4 billion to buy out the minority APB shareholders.
Heineken currently has a 41.9 percent stake in APB, through a direct 9.5 percent shareholding and an indirect shareholding of 32.4 percent that is held through the 80 year long joint venture with F&N.
Bankers agree that, if Heineken really wants APB, the Dutch may have to raise the offer. The present offer runs until 3 August 2012.
The Japanese beverage giant Kirin Holdings could also enter the fray. The Wall Street Journal reported that Kirin may consider a bid for the food and soft drink business of F&N.
In the worst case, F&N’s shareholders could vote against Heineken’s offer. All would lose out from having F&N sell off its prized brewery unit, which contributed about 38 percent to F&B’s group earnings. Without APB, F&N’s food and beverage business would be left with its Southeast Asian soft drinks and dairies businesses.
F&N would effectively become a property developer with an undersized consumer division without APB, says Deutsche Bank.
