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F&N Board Said to Recommend Heineken’s S$50 a Share APB Bid

August 03, 2012

F&N Board Said to Recommend Heineken’s S$50 a Share Bid for APB

Crates of Heineken NV beer and Asia Pacific Breweries Ltd. Tiger beer are stacked at a holding area at the Asia Pacific Breweries Ltd. plant in Singapore. Photographer: Munshi Ahmed/Bloomberg

Fraser and Neave Ltd.’s board of directors will recommend Heineken NV (HEIA)’s S$50-a-share offer for Asia Pacific Breweries Ltd. (APB) to its shareholders, according to three people with knowledge of the matter.

Heineken won agreement from F&N without having to increase the bid, which it made on July 20, said the people, who declined to be identified because the deal has yet to be announced. The Amsterdam-based company already owns 42 percent of APB, primarily through a joint venture with F&N, and said July 20 it will offer as much as S$7.5 billion ($6 billion) for the rest.

Heineken is seeking full control of APB, the Singapore- based maker of Tiger beer, through which it distributes its brands in southeast Asia. The Dutch company, which has been involved with APB since 1931, made the offer to protect its hold over a key emerging-market asset after Thai Beverage Pcl (THBEV), controlled by billionaire Charoen Sirivadhanabhakdi, last month bid for a 22 percent stake in F&N. A company owned by his son- in-law also acquired about 8.4 percent of APB.

Heineken rose as much as 2.7 percent to 45.67 euros in Amsterdam trading and traded at 45.34 euros at 2:09 p.m.

APB’s shares closed on Aug. 1 at S$49.50, before trading was halted yesterday in Singapore. Some analysts had expected Heineken to have to raise its offer to secure control of APB.

Bid Premium

The offer values F&N’s 40 stake in APB, as well as some smaller assets, at S$5.12 billion. The price of S$50 a share is 19 percent above APB’s closing price of S$42 on the day before Heineken announced its plan, and more than the S$45 a share that a company owned by Sirivadhanabhakdi’s son-in-law, Chotiphat Bijananda, agreed to buy its stake from Oversea-Chinese Banking Corp. The average premium paid in 45 takeovers of beermakers announced in the last two years is 25 percent.

The purchase would be the latest step in the consolidation of the industry as brewers buy each other or seek full control of joint ventures. Anheuser-Busch InBev NV, the world’s biggest brewer with an 18 percent share of the market, bid $20.1 billion for the remaining 50 percent of Grupo Modelo SAB in June, tightening its hold on the Mexican market.

Brewing assets in high-growth emerging markets are in short supply following a decade of consolidation in the industry.

The APB deal would be Heineken’s largest after offering $7.4 billion in 2010 for the beer operations of Coca-Cola bottler Fomento Economico Mexicano SAB, or Femsa.

Emerging-Market Presence

Heineken, which accounts for about 8.8 percent of the global beer market, has the smallest emerging-markets presence of the world’s big three brewers, according to data compiled by Bloomberg. About 37 percent of the company’s operating income last year came from western Europe, where high levels of competition, economic turmoil and already-high per-capita beer consumption is holding back sales growth.

Besides the Singaporean Tiger brand, APB has rights to brew Bintang beer in Indonesia, Anchor in China, Southeast Asia and Sri Lanka, and Heineken from China to New Zealand.

To contact the reporters on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net; Clementine Fletcher in London cfletcher5@bloomberg.net; Elffie Chew in Kuala Lumpur at echew16@bloomberg.net

To contact the editor responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net


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