Published: Friday August 3, 2012 MYT 11:30:00 AM
Updated: Friday August 3, 2012 MYT 11:41:02 AM
Heineken expected to sweeten $4.1bil offer to Fraser and Neave
SINGAPORE: Heineken is expected to sweeten its $4.1 billion offer to Fraser and Neave (F&N) to win control of Tiger Beer and 24 Asian breweries, in a deal that could lift the Dutch brewer's profits and break apart the Singapore drinks and property group.
Heineken, which already owns 42 percent of the prized Asia Pacific Breweries (APB), wants F&N's 40 percent stake as part of a general offer to defend its territory against advances by Thailand's second-richest man.
The world's third-largest brewer extended its offer of S$50 per APB share until this Friday, fuelling speculation that F&N was haggling with Heineken over the price.
The deal is vital for Heineken in the fast-expanding Asian market. Control of APB may raise the proportion of profits it gets from Asia to 15 percent from 6 percent, European analysts said, boosting the growth rate of the whole group.
"My reading is Heineken will go all out to win," said Goh Han Peng, an analyst at DMG & Partners Securities. "APB's current valuation looks high, but if you look at the nature of their business and the growth potential it's considerably worthwhile to pay so much."
Goh said Heineken could raise its offer to as much as S$60 per share, which would be a premium of more than 20 percent to APB's last traded price.
Sources said Coca-Cola is keeping a keen eye on F&N's other lines -- which include the popular soft-drink 100PLUS, fruit juices, mineral water and dairy products -- in the event they are hived off from the Singapore group's property assets.
That could pit Coca-Cola against two sizeable Asian brewers, Thai Beverage and Japan's Kirin Holdings, which have their own interests to protect as F&N's two largest shareholders.
Shares of F&N and APB were suspended from trading on Thursday and Friday, after sources told Reuters that F&N's board, whose chairman Lee Hsien Yang is the younger son of Singapore's elder statesman Lee Kuan Yew, was pushing Heineken to make a better offer.
If it wins APB, Heineken will get full ownership of Tiger, Bintang, Anchor and other brands of beer plus two dozen breweries in 14 countries including Singapore, Malaysia, Indonesia, Vietnam, Thailand and Cambodia.
Heineken began brewing Tiger with F&N in the 1930s but that long partnership hit the rocks after Thai Beverage and other companies linked to Thai billionaire Charoen Sirivadhanabhakdi bought stakes in F&N and APB for $3 billion last month.
The investment by Charoen, who wants to expand his own beer business in Asia, pushed Heineken into a general offer for APB.
If F&N were to accept the $4.1 billion offer, Heineken would pay minority shareholders about $2 billion. That amount would be higher if it offers more to F&N.
Thai Beverage has raised its stake in F&N to 24.1 percent since its initial purchase, making it the biggest shareholder.
Kirin, which owns 15 percent of F&N, will release first-half earnings on Friday and is certain to be barraged by questions about its plans at a media briefing.
COKE IS WATCHING
Coca-Cola, the world's largest soft-drinks maker, is interested in a possible opportunity to bid for F&N's beverage business but is waiting to see how the Heineken bid plays out, sources familiar with the situation told Reuters on Thursday.
A U.S.-based spokesman for Coca-Cola declined to comment.
Banking sources say a bid by Coca-Cola for F&N's beverage business would be possible only if F&N is broken apart and that Kirin could also be a potential suitor.
Last year, F&N and Coca-Cola ended a partnership under which F&N bottled and sold Coca-Cola's drinks in Malaysia and Coca-Cola did the same for F&N in Singapore.
Most of F&N's food and beverage business is locked up in its Malaysian unit, whose shares jumped 4.6 percent on Thursday on speculation about Coca-Cola's interest and were up as much as 5 percent on Friday morning.
Without APB, F&N will rely heavily on property assets that include upscale malls in Singapore and serviced apartments in various parts of the world. In that case, Nomura Holdings says, 80 percent of F&N's earnings would come from real estate, with most of the rest from soft-drinks and a bit from publishing.
F&N shares have jumped 31.5 percent this year to close at S$8.15 on Wednesday, though off a record S$8.49. APB shares, which last traded at S$49.50, have surged 71.9 percent since the start of the year. - Reuters