Heineken is creeping towards its goal of buying Singapore’s Asia Pacific Breweries, the maker of Tiger Beer, as it wrestles for control of the iconic brew with the billionaire owner of Thai Beverage.
The Dutch brewer owns half of Asia Pacific Breweries through a joint venture with Fraser and Neave, and is offering to buy out its partner through a S$53-a-share offer for its direct and indirect 39.7% stake in Asia Pacific Breweries, which the Fraser and Neave board accepted on August 18 and is pending shareholder approval.
Yesterday, Heineken said that it had paid S$53 a share for a further 2.68% stake in the company, acquired in the open market for S$367 million, taking its total direct interest to more than 80% — assuming the deal to buy Fraser and Neave’s shares goes through. Credit Suisse and Citi acted for Heineken in the open-market acquisitions.
The challenge from ThaiBev’s Charoen Sirivadhanabhakdi started on July 19, when the Thai group sealed a S$3.8 billion deal with several major shareholders to buy stakes in both Asia Pacific Breweries and Fraser and Neave, offering S$45 a share for an 8.6% block in the Tiger Beer maker, and later followed that move with a higher-priced S$55 bid for Fraser and Neave’s 7.3% direct stake in Asia Pacific Breweries.
Even without Fraser & Neave's stakes, Heinken now has direct ownership of roughly 45% of the company — including a roughly one-third overall stake through its ownership in the JV and a 12% direct stake (since the latest round of open-market share buying).
If shareholders approve the deal to buy Fraser and Neave’s shares, its total holding will increase to an unassailable 84.2%, effectively ending the battle for control with ThaiBev.
However, Heineken’s stock came under pressure yesterday, falling more than 5% during morning trading, as investors questioned profit expectations that the company said would be “broadly in line” with 2011. Investors are not convinced, given the dire outlook for European sales this year.
At stake is a portfolio of more than 40 beers and 31 breweries in 15 countries in Asia, including some of the most attractive growth markets in the world.
Fraser and Neave’s board has accepted the terms of the Heineken bid and said it would recommend the offer to shareholders.
Heineken is a global brewer with a presence in more than 70 countries and operates more than 140 breweries, making it Europe’s biggest brewer and the world’s second largest by revenue. Its other brands include some of the world’s best known beers, such as Amstel, Birra Moretti, Dos Equis, Foster’s, Heineken, Newcastle Brown Ale, Sol and the cider Strongbow. In 2011, its revenue totalled €17.1 billion.
Timeline of the Tiger Beer battle:
July 16: ThaiBev and Kindest Place signed agreements with OCBC, GE and Lee Rubber to buy a 22% stake in F&N at $8.88 a share and an 8.6% stake in APB at $45 a share
July 20: Heineken offered to pay $50 a share for F&N’s direct and indirect 39.7% in APB
Aug 3: FNN board accepted Heineken’s offer and said it would recommend to shareholders
Aug 7: Kindest Place put in an unsolicited bid for F&N’s direct 7.3% stake in APB for $55 a share
Aug 14: ThaiBev and Kindest Place completed investment into F&N and APB
Aug 18: Heineken and F&N entered into definitive agreement to recommend F&N shareholders to agree on selling 39.7% stake in APB at $53 a share
