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Heineken Mulls APB Bid Hike to About S$53 a Share: Sources

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by Ernie B. Calucag

Heineken NV is reportedly in talks with Singapore conglomerate Fraser & Neave (F&N) about raising its offer for the rest of Asia Pacific Breweries Ltd (APB).

Sources said the Dutch brewer is considering raising its offer to about S$53 a share from its earlier offer of S$50 per share for APB.

F&N and APB both requested trading halts Friday as a multi-billion-dollar battle for the makers of Tiger Beer heats up.

The two companies announced the halts before the Singapore Exchange opened, both citing “pending release of an announcement” as the reason.

An announcement may come as early as Friday, sources added. As of this writing, however, no announcement has been made yet by any of the parties.

A condition for a higher bid may include guarantees over deal completion, sources further said.

APB is the target of a takeover battle between Heineken and companies linked to Thai billionaire Charoen Sirivadhanabhakdi.

The Dutch beermaker last month offered to buy F&N’s 40-per cent share in APB at S$50 apiece, which F&N’s board had recommended shareholders to accept.

However, Charoen’s Thai Beverage and a company owned by his son-in-law, Kindest Place, have mounted counter-moves.

Kindest Place offered to buy F&N’s 7.3 percent direct stake in APB for SS$55 a share – 10 per cent more than the Heineken proposal.

At the same time, Thai Beverage has steadily built up its stake in F&N, raising it from 24 per cent to 26.4 per cent, inching closer to a level at which acquirers of company stakes are expected to begin takeover offers.

Singapore’s takeover guidelines require a buyer of a 30 per cent take to bid for the rest of the company in a so-called open offer.

“The Dutch brewing giant will be keen to get F&N to put pen to paper on any renewed offer to avoid another counter-bid from ThaiBev who will be looking to scupper any new deal,” said Justin Harper of IG Markets in Singapore.

“While many will be expecting Heineken to announce a better offer than the Thai’s S$55 a share for F&N’s direct stake in APB, Heineken may just match this offer, but for F&N’s full 40 per cent share in APB,” he added.

Heineken already owns 42 per cent of APB and is seeking full control in a bid to expand its presence in the fast-growing Asian market.

APB, set up in 1931 as a joint venture between F&N and Heineken, has rights to brew Bintang beer in Indonesia, Anchor in China, Southeast Asia and Sri Lanka, and Heineken from China to New Zealand.

Heineken hopes a successful takeover of APB would give it a leg up over rivals in the 10-member Association of Southeast Asian Nations (ASEAN) market of some 600 million consumers.

Apart from Tiger and Bintang, brands such as Charoen’s Chang Beer and San Miguel from the Philippines are competing with Heineken, Denmark’s Carlsberg and other brands from developed economies.

“The Dutch will clearly not give up their dream of full control of APB without a fight, knowing there are only a few smaller fish available in a pond brimming with big fish. APB isn’t even in the top five biggest Asian-based brewers,” continued Harper.

“While APB is best-known for Tiger beer, in an amusing twist of fate the biggest brand that it brews in Asia is Heineken, “he further said.

“Thai Bev is a winner both ways,” said Jenai Chua, a Singapore-based analyst at Bank Julius Baer in an interview earlier this month. “If the APB sale goes through, they can still make a pretty big disposal gain should F&N decide to distribute proceeds of the sale to shareholders as dividend. If it doesn’t go through, they get a chunk of a very lucrative and well-established beer business.”

Heineken spokesman John Clarke referred to a previous company statement that discussions with F&N were continuing. Reuters reported the talks earlier Friday, citing unidentified people.



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