Dutch brewer Heineken took a major step towards winning control of the Tiger beer brand and an Asian brewing network yesterday after a Thai rival accepted the deal.
Billionaire Charoen Sirivadhanabhakdi’s Thai Beverage PCL and TCC Assets Ltd said they would vote in favour of the sale of Singapore conglomerate Fraser and Neave’s stake in Asia Pacific Breweries Ltd to Heineken.
In return, Heineken, the world’s third-largest brewer, will not make an offer for shares in F&N.
The deal between the Thais, the largest F&N shareholders with a near 31 per cent stake, and the Dutch brewer ended a standoff after two months of competing offers for control of APB.
Heineken, already sharing control of APB through an 81-year-old venture with F&N, now seems set to take full control of the brewer and protect its turf in Asia’s fast-growing beer market. “This is settlement talk, to prevent any further escalation of the fight for F&N or APB, which will cost more for both parties if it goes on,” said Goh Han Peng, an analyst at DMG & Partners Securities in Singapore.
“Heineken would henceforth be able to complete consolidating APB. ThaiBev would get the balance of the F&N business and give it to a platform or distribution channel to regional markets in Southeast Asia.”
Heineken shares rose as much as 6.4 per cent to €45.585, a seven-week high, and were the strongest performers in the FTSEurofirst 300 index of leading European stocks.
Brokers said Heineken is paying a steep price for a deal with limited synergy benefits or revenue gains, given it is already operating APB’s business.
However, likely borrowing costs for Heineken of only about three per cent and high growth potential means the deal should immediately boost earnings. APB’s revenue has risen 49 per cent in the past two years.
F&N’s board has backed the deal and its shareholders are due to vote on the proposed sale of its 40 per cent stake in APB to Heineken at an extraordinary general meeting (EGM) on September 28.
“With ThaiBev’s support, there is much certainty that the sale of APB assets will be approved at the EGM,” said a source with knowledge of the matter. “But the future of F&N will depend on who will be the ultimate owner of the company.”
F&N’s other shareholders such as Japan’s Kirin Holdings Co Ltd will wait for the “fairness opinion” of an independent financial adviser before they decide whether to sell their stakes to Charoen, another source said, declining to be identified because the details of the matter were confidential.
Kirin is poised to make a near 37 per cent gain on its investment in F&N shares, bought from Singapore state investor Temasek Holdings Pvt Ltd for S$6.50 a share in 2010.
The Japanese company previously said it is interested in F&N’s food and non-alcoholic drinks business.