Business

Saturday August 18, 2012

Heineken, F&N in talks on higher bid


SINGAPORE: Heineken NV is negotiating with Fraser and Neave (F&N) about raising its US$6bil bid for full control of the maker of Tiger Beer and breweries in 14 countries as it fights against a Thai billionaire for its future in Asia.

A revised offer for Asia Pacific Breweries (APB) by Heineken, the world's third largest brewer, could be up to 10% higher than its earlier bid and may be conditional on F&N not accepting a partial Thai bid, sources with direct knowledge of the talks told Reuters.

“It is definitely a higher price,” said one of the sources, declining to be identified because the talks are confidential.

Two sources said the Dutch brewer, which has said its full bid would give greater value to all APB shareholders, may simply match a partial offer by the Thai group of S$55 per APB share.

An F&N spokeswoman declined to comment. Heineken was not immediately available to comment.

Control of APB is vital for Heineken, which had offered S$50 per share for the 58% it does not already own. That includes the 40% of APB held by its long-time partner F&N, a drinks and property conglomerate.

But Heineken's efforts have been complicated by Charoen Sirivadhanabhakdi, Thailand's second richest man, as he seeks to expand his Thai Beverage empire in the fastgrowing South-East Asian market.

Thai Bev recently became F&N's largest shareholder with 26.4%. Charoen's son-in-law, through his group Kindest Place, separately offered to buy F&N's direct 7.3% stake in APB at S$55 per share.

“Heineken's resolve to win APB seems to be very strong,” said Andrew Chow, head of research at UOB Kay Hian in Singapore. “APB has an extensive distribution network and breweries. Its Tiger brand is also strong in Asia. At S$50, it's already not that cheap, but I suppose in this kind of situation they can probably extract more.”

The Thais have said they want to work with Heineken, but sources close to the situation say it would not be keen to cooperate with a competitor.

APB is seen as a very attractive business with nearly 20% annual earnings growth over the last decade.

The biggest brand APB brews is Heineken itself, accounting for 30% of its volume, but it also makes Tiger, Bintang and Anchor, and runs 30 breweries in countries including Singapore, Malaysia, Indonesia, Vietnam, Thailand and Cambodia.

Among South-East Asian brewers, APB is the sixth largest in terms of sales across the Asia-Pacific region, behind San Miguel Corp of the Philippines in number one spot and Thai Bev in fourth, according to Euromonitor's latest data for 2011.

Trading in APB and F&N shares in Singapore was suspended yesterday pending an announcement.

Heineken has said its offer was a 45% premium to the price of APB shares a month earlier and the F&N board had agreed to recommend the bid to its shareholders.

“Heineken wants full control of Asia Pacific Breweries, while Charoen wants a piece of that growth and is positioning himself to gain handsomely if Heineken wants to buy him out in the future,” said an investment banking source in London. - Reuters

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