Bloomberg News

Heineken Says Thai Billionaire Supports Its APB Offer

September 19, 2012

Thai billionaire Charoen Sirivadhanabhakdi’s companies gave their support to Heineken NV (HEIA)’s offer for Fraser & Neave Ltd (FNN)’s beer business, paving the way for him to take control of the conglomerate’s other assets.

Charoen’s Thai Beverage Pcl (THBEV) surged by a record while Heineken rose the most in almost three years. ThaiBev and TCC Assets Ltd. will back Heineken’s S$5.6 billion ($4.6 billion) bid for F&N’s stake in Asia Pacific Breweries Ltd. (APB) at a shareholder meeting next week, according to a joint statement. The Dutch brewer, which runs APB in a venture, agreed not to make a competing offer for F&N.

A successful bid by Charoen’s companies would add a fast- growing soft drinks, dairy and real-estate business to its portfolio. The billionaire last week offered about S$9 billion for F&N to add property and non-alcoholic drink assets similar to businesses he already controls. The move fueled concern that Heineken may be blocked from buying Tiger beer maker APB.

“It was naive of people to assume that the main game here was APB,” said Jonathan Foster, director of Global Special Situations at Religare Capital Markets in Singapore. F&N’s non- alcoholic beverages and food business “is a major growth driver for Thai Beverage; it’s what they’re focusing on and where they’re getting their growth from. They have always been interested in that asset.”

Largest Deal

ThaiBev jumped 13 percent to 39 Singapore cents, the highest level since its May 2006 initial public offering in Singapore. F&N fell 1 percent to S$8.88, while APB declined 0.2 percent to S$52.99. Heineken rose as much 6.6 percent to 45.66 euros in Amsterdam.

TCC, controlled by 68-year-old Charoen, made the S$9 billion bid for the 70 percent of F&N he doesn’t control on Sept. 13, offering S$8.88 a share for the conglomerate. It is the largest takeover announced by a Thai company in at least 10 years, according to data compiled by Bloomberg. The offer came ahead of a Sept. 28 meeting where F&N shareholders will vote on the Dutch brewer’s proposal.

“The agreement with Heineken will remove confusion and speculation ahead of the F&N shareholders’ meeting,” Vichate Tantiwanich, a spokesman for ThaiBev, said by phone today. The accord “demonstrates our long-term strategy on F&N, which has synergies that will help ThaiBev’s expansion in the region.”

Kirin’s Interest

F&N recommended that holders accept Heineken’s increased S$53-per-share bid for the 40 percent stake in APB in August. Heineken, the world’s most acquisitive brewer in the past 12 months, had said that would be its final offer. It was originally spurred to bid for control of APB, of which it holds at least 42 percent, after Kindest Place Groups Ltd., a company controlled by Charoen’s son-in-law, bought shares in APB.

Heineken said today it agreed to buy Kindest Place’s 8.6 percent stake in APB at S$53 a share after reaching its accord with TCC last night. The sale will be completed by no later than Oct. 3. Heineken has direct and indirect interests in 95.06 percent of APB’s shares, it said.

Charoen’s unlisted business TCC Group has a real-estate arm and ThaiBev sells non-alcoholic drinks in addition to beer and spirits. F&N’s real-estate business has boosted sales 33 percent since 2007 and the soft-drinks unit has increased revenue by 64 percent, according to data compiled by Bloomberg. Sales at its brewing business rose 60 percent.

Southeast Asia Rights

The billionaire’s agreement to support Heineken’s offer for APB spurred speculation that he would break up F&N, a 129-year- old group. Japan’s Kirin Holdings Co. (2503) owns a 15 percent stake in F&N and had considered making a bid for its food and soft-drinks unit, several people with knowledge of the matter said in August. Coca-Cola Co. (KO:US) explored a bid for the drinks operations, people with knowledge of the matter have said.

“They’re both going to win from this situation,” which may lead to distribution agreements if Heineken and ThaiBev stay amicable, said Justin Harper, a Singapore-based market strategist at IG Markets.

Yuko Kusano, a spokeswoman for Kirin, and Joanna Price, a spokeswoman for Coca-Cola in Asia, declined to comment.

APB would be the Dutch brewer’s largest acquisition since its 2010 purchase of Fomento Economico Mexicano SAB’s beermaker as it seeks to expand in faster-growing emerging markets, according to data compiled by Bloomberg.

Singapore-based APB has rights to brew Bintang in Indonesia, Anchor in China, Southeast Asia and Sri Lanka, and Heineken from China to New Zealand.

The agreement “should be very positive for Heineken’s share price,” said Gerard Rijk, an analyst at ING Groep NV (INGA) in Amsterdam. “The company will not need to raise its offer further and it will be able to consolidate the APB business.”

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Sharon Chen in Singapore at schen462@bloomberg.net; Clementine Fletcher in London at cfletcher5@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net; Stephanie Wong at swong139@bloomberg.net


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