Heineken yesterday hit back at a rival bid for control of Singapore’s Asia Pacific Breweries, the maker of Tiger Beer, making sure to point out the inferiority of the unsolicited offer.
The Dutch brewer owns half of Asia Pacific Breweries through a joint venture with Fraser and Neave, but found its investment under threat last month after a challenge from a group led by the billionaire founder of ThaiBev, Charoen Sirivadhanabhakdi.
The battle started on July 19, when the Thai group sealed a S$3.8 billion ($3 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.
Heineken answered by offering to buy Fraser and Neave out of the two companies’ joint venture, including a S$50-a-share offer for its direct and indirect 39.7% stake in Asia Pacific Breweries, which the Fraser and Neave board accepted on August 3.
ThaiBev countered that move with a higher-priced S$55 bid for Fraser and Neave’s 7.3% direct stake in Asia Pacific Breweries.
The Heineken bid is clearly for a much bigger portion of the company. The total size of its offer is S$5.3 billion, and it will trigger a mandatory general offer of up to S$2.4 billion for the remaining shares — much bigger than the S$1 billion offer from the Thai group.
“The unsolicited offer is not comparable to the Heineken offer,” the Dutch brewer said in a statement yesterday, adding that its proposal “represents compelling value” for shareholders.
Even so, the richer terms offered by the Thais are putting pressure on Heineken to improve its own offer. At the same time, the battle has also helped to drive up Asia Pacific Breweries’ share price — the Singapore brewer is now trading close to Heineken’s offer of S$50, up from less than S$35 before ThaiBev got involved.
On the face of it, Heineken seems to have the upper hand. ThaiBev is about a quarter of the size of the Dutch brewer and has little ability to take on more debt. Indeed, Moody’s and Standard & Poor’s both placed the company under review for downgrade after its initial bid.
Charoen, Thailand’s second-richest man, clearly has access to capital and could aim to increase its 24% stake in Fraser and Neave, but even he will struggle to win a bidding war with a company the size of Heineken.
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 so far acknowledged the unsolicited offer from the Thai group, but not made any further statements. It had previously accepted the terms of the Heineken bid, and the next step if that proves successful will be to recommend the offer to shareholders and put it to a vote. It remains to be seen if that will yet happen.
