Heineken has launched a bid to take control of Asia Pacific Breweries, the maker of Tiger Beer, in response to a challenge from ThaiBev last week. The Dutch brewer is offering S$5.1 billion ($4 billion) to buy out Fraser and Neave’s stake in the company, which would take its interest up to 81.6% and thwart its Thai rival’s ambitions.
The move did not come as a big surprise. On Thursday, ThaiBev and an associated company agreed to pay S$3.8 billion for a 22% stake in Fraser and Neave and an 8.6% stake in Asia Pacific Breweries. That put Heineken in an impossible position. It has been making Tiger Beer in partnership with Fraser and Neave since 1931, and the two companies own 64.8% of Asia Pacific Breweries through an equal joint venture.
ThaiBev, which makes Chang Beer and is Thailand’s biggest drinks company, is clearly a competitor to Heineken, which is keen to expand its presence in the emerging markets. Asia Pacific Breweries is an important part of that strategy. It has a portfolio of more than 40 beers and operates 31 breweries in 15 countries in Asia, including regional and local brands such as Anchor, Bintang and Larue.
Heineken’s response was swift and, it hopes, decisive. The offer of S$50 a share is S$5 better than the price of ThaiBev’s deal and 45% higher than the stock’s average price during the previous month. It values the Singapore brewer at S$12.9 billion, or S$1.5 billion more than the Thai deal.
Heineken is also bidding for Fraser and Neave’s direct 7.3% shareholding in Asia Pacific Breweries, in addition to the 32.4% it owns through the joint venture — and it has offered S$163 million for the rest of the assets held by the joint venture.
Fraser and Neave shareholders will consider the offer this week. If successful, Heineken will then make a mandatory general offer for the rest of the shares of Asia Pacific Breweries at the same price, for a maximum consideration of S$2.4 billion.
“We really value our partnership with F&N, which goes back over 80 years, but due to changes in the F&N and APB shareholding, the fabric of the partnership has changed,” said Jean-François van Boxmeer, Heineken’s chief executive, in a statement. “As a result, it is time for us to look ahead to the next chapter of our Asian business, in which Singapore will continue to be our regional headquarters and both the Heineken and Tiger brands will spearhead our brand portfolio in Asia.”
He added that the offer was “highly attractive” and provided “excellent value” to shareholders of Fraser and Neave and Asia Pacific Breweries, as well as creating “long-term financial and strategic value” for Heineken’s shareholders.
Citi and Credit Suisse are advising Heineken, while HSBC and Morgan Stanley advised the Thai buyers.
