The Nation


Beer war

Heineken upbeat despite Charoen's new move on F&N

Dutch firm insists unsolicited offer can't match its bid for full 39.7percent stake in Asia Pacific Brewery

Although Charoen Sirivadhanabhakdi has made an offer for part of Fraser and Neave's stake in Asia Pacific Breweries (APB), Heineken believes the move is not comparable to its own bid for F&N's entire holding in the company.

"The unsolicited offer is not comparable to the Heineken offer," the Dutch brewer said in a statement released yesterday.

Heineken earlier made an offer for F&N's entire direct and indirect stake of 39.7 per cent in APB, as well as F&N's 50-per-cent share of the non-APB assets in Asia Pacific Investment, for a combined 5.3 billion Singapore dollars (Bt134 billion).

If this is agreed, Heineken Group will make a mandatory general offer for the remaining shares in APB that it does not own, for a total of S$2.4 billion. The overall deal would then be valued at S$7.7 billion.

"The total consideration to F&N under the unsolicited offer would be S$1 billion. Heineken continues to believe that the Heineken offer represents compelling value for F&N's and APB's shareholders. Heineken continues its discussions with F&N in relation to the Heineken offer accepted by the board of F&N on August 3," Heineken said.

Kindest Place Groups, owned by Charoen's son-in-law Chotiphat Bijananda, on Tuesday made an unsolicited bid for 18.8 million of the shares F&N owns in APB, or 7.3 per cent.

The company offered S$55 apiece for the stake, 10 per cent higher than Heineken's S$50 offer for F&N's entire APB holding.

Kindest Place Groups already owns 8.6 per cent of APB while Thai Beverage, Charoen's flagship business, holds 24.1 per cent in F&N.

Heineken has been expected to raise its bid, as APB is considered a prize Asia-Pacific asset with more than 30 breweries in 14 countries.

The Wall Street Journal yesterday reported that Heineken had an alternative to paying up or losing out.

It said the Dutch company's decades-long relationship with F&N had appeared to be running smoothly - and Kirin Holdings of Japan has been a major investor since 2010 - until ThaiBev's appearance.

Heineken likely fears being pushed out of APB altogether if it fails to act first, and probably looks at ThaiBev as an unpredictable partner. If that is the case, the newspaper said, the Thai group's surprise move on F&N would compound any worries. However, breaking up is not proving easy.

"If the parties involved could just get along, there could be some benefits. Like Heineken, ThaiBev wants to expand into fast-growing markets like Vietnam and Malaysia. A relatively passive Thai group could prove a useful ally. Certainly, Heineken has been clear it wants to own APB outright. But the Dutch brewer will have to figure out what price it is prepared to pay before an unpalatable partnership with ThaiBev makes more sense," said the WSJ.

Rajiv Biswas, Asia-Pacific chief economist at research group IHS Global Insight, told Agence France-Presse: "The new Thai bid for the Fraser and Neave stake in Asia Pacific Breweries reflects a broader trend of the ascendancy of Asian multinationals.

"This is evident in the global brewing industry, with companies from Japan, China, Thai-land and the Philippines building their global footprint and competing fiercely with North American and European firms," he said.


Analysts say Heineken is now under pressure to improve its proposal before an extraordinary general meeting of F&N shareholders takes place. The industry is also waiting for the next move by the Thai faction.

"We believe a bidding war has begun," Malaysian bank CIMB said in a note.

DMG and Partners Securities said it expected F&N to take into account the fact that the Thai offer is only for a portion of its APB stake, and that it is not as comprehensive as Heineken's.

In Asia-Pacific, apart from APB's Tiger, such brands as ThaiBev's Chang Beer, San Miguel from the Philippines and Indonesia's Bintang, also owned by APB, are competing with Heineken, Denmark's Carlsberg and other brands from developed economies.

APB reported revenues of S$773.42 million in its second quarter ending March 31, up 15 per cent from a year ago, with most of the sales generated in Asean.

Overall beer consumption in nine Asean countries totalled 6.84 billion litres last year, up about 6.2 per cent from 2010, with Vietnam, Thailand and the Philippines leading the market, data from research firm Euromonitor show.

Comments conditions

Users are solely responsible for their comments.We reserve the right to remove any comment and revoke posting rights for any reason withou prior notice.