Heineken buys 3.21 percent stake in Zywiec from Harbin
Who on earth is Harbin? It was only a small news item on 9 April 2013 that Dutch brewer Heineken, via its Austrian unit Brau Union AG, bought a 3.21 percent stake in brewer Zywiec from the minority shareholder Harbin.
The stake is worth some PLN 159.9 million (EUR 39 million/USD 51 million). Zywiec, which is Poland's number two brewer with a market share of 32 percent, has a market capitalisation of USD 1.6 billion.
Before the transaction Heineken's unit Brau Union AG controlled 61.94 percent of Zywiec, while Harbin NV, a private company Heineken described in one of its documents as its partner at Zywiec, controlled 36.22 percent.
Now who happens to be Harbin? Well, that's a long story of big risks, even bigger daring and plain good luck. The story takes us right back to 1990 when Poland's communist regime fell and in the course of what was later called "economic transformation" former state-owned breweries were privatised.
The man who gambled high was the Australian Allan Myers, 66, a commercial lawyer whose area of expertise includes taxation and revenue. Insiders say he can command up to AUD 20,000 (USD 21,000) a day in fees for appearing as leading counsel in large and complex cases.
A few years ago, The Australian newspaper revealed that Mr Myers had amassed one of the nation's largest fortunes, estimated to be more than AUD 700 million, through a far-sighted investment in Polish brewing in 1990.
His investment in the Polish brewing industry is a typical example of being in the right place at the right time and having the right connections. Mr Myers and his business partners made their original USD 4.8 million investment in 1990.
Their timing could not have been better. Since the Iron Curtain came down in 1989, the beer sector has been not only one of the fastest growing sectors in Poland but it also experienced the highest dynamics of beer consumption and production in Europe.
Per capita consumption of beer has risen to 89 litres in 2011 from 33 litres in 1991. Poland's brewers produced 38 million hl of beer in 2011 compared with 13 million hl in 1991.
Mr Myers' investment in Poland was overseen by former Bond Corp executive Tony Oates, who is a really colourful character.
It will be remembered that Australia's Bond Corp, which included several breweries (later taken over by Lion Nathan and then Kirin), spectacularly rose in the 1980s, only to crash at the end of the 1980s, chalking up the then largest loss in Australian corporate history, with a deficit of more than AUD 1 billion. Soon afterwards, it disappeared into a AUD 5 billion black hole and broke the record for Australia's biggest corporate collapse.
Mr Oates was Mr Bond's finance man and luckily managed to resurface in Poland just months after the fall of Bond. Through Mr Myers' company Brewpole he acquired the breweries Elbrewery and Hevelius, which gave Brewpole a market share of 9 percent in 1990.
Alas, Mr Oates' past caught up with him in the mid-1990s when he was charged with corporate fraud and for seven years fought his extradition to Australia. Mr Oates eventually had to return to Australia in 2003 where he was jailed for three years and four months in 2005 after pleading guilty to stripping AUD 500 million from a Bond satellite company through a series of "back-to-back" loans, using a friendly intermediary bank, newspaper reports at the time said.
Despite Mr Oates' "problems", Brewpole continued to buy other breweries such as Browar Warka (6 percent of the market) and Browar Leżajsk (3.5 percent of the market) in early 1998. After the acquisition of these companies Brewpole had 25 percent of the market and was the biggest beer producer on the Polish market.
Brewpole, on top of an expanding industry, also enjoyed rapid market-share growth, thanks to the successful launch of EB in 1992 – a brand of beer aimed at young consumers. Moreover, Elbrewery very quickly modernised production lines, created very effective distribution networks and adopted an aggressive and comprehensive promotion campaign, market observers say.
This led to spiralling prices in the second round of takeovers, such as the Heineken deal. Heineken, which was the main shareholder of brewer Zywiec – then the third largest beer producer in Poland with 14 percent of market share – had decided to play an active role in the consolidation process. In late 1998 Zywiec and Brewpole merged to form Grupa Zywiec through a share swap. The transaction price was never disclosed.
In any case, Heineken then became a majority shareholder in Grupa Zywiec with a 61 percent shareholding, while Harbin, the successor to Brewpole, controlled 36.2 percent, with the remaining shares publicly traded on the Warsaw Stock Exchange.
Mr Myers has proven reluctant to comment on his private business ventures. Once, when approached by The Australian newspaper, Mr Myers said that he had disposed of the Polish brewing investment in 1995. So how come Mr Myers has sat on Zywiec's Supervisory Board for a number of years?
That's why Australian hacks started digging and in 2008 revealed that since 2003 he has held an indirect interest in Zywiec through a chain of companies in Europe and Australia. The Australian newspaper established that Mr Myers, his business partner John Higgins and another, undisclosed shareholder have held interests in a Danish company called Gansu. Gansu holds 78 percent of Harbin, which in turn had a 36 percent stake in Zywiec until early April 2013.
They also found out that holding structures adopted by investors in the stake, which are believed to include Mr Oates, have changed several times, and rolled through tax havens such as the Dutch Antilles and the British Virgin Islands.
Aside from his varied investments, his long legal career has also made him into a high earner. Not bad for the son of a butcher who reportedly said he has never really loved the law.
