Singha sees no impact from ThaiBev's acquisition

Corporate August 04, 2012 00:00

By Kwanchai Rungfapaisarn


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Singha Corp, a major rival of Thai Beverage, foresees no significant impact from the latter's possible takeover of Fraser & Neave (F&N) and its unit Asia Pacific Brewery (APB) in Singapore, according to Singha marketing director Chatchai Wiratyosin.

"Both Tiger and Heineken already exist in the Thai market and I don’t see any impact on Singha from the takeover. Such business buyouts are not the way Singha does business. We ourselves have no policy of taking over [other firms]," Chatchai said.

He added that the company experienced no impact from ThaiBev’s previous takeover of Serm Suk, a local distribution company and bottler of Pepsi-Cola beverages.

"Singha beer is available in the same channels as Pepsi. So, we don’t think such a takeover will have any impact on our products as it will not give them any advantage in increasing their distribution channel coverage," said Chatchai.

A source from ThaiBev, however, revealed that the company had no plan to sell its stake in F&N, but is ready to work together with Heineken, its major shareholder, in the company.

The source said that the takeover of Serm Suk also allowed ThaiBev to better penetrate food stalls.

Thai Beverage, which is controlled by liquor tycoon Charoen Sirivadhanabhakdi, said on Tuesday it had obtained a key waiver from the Singapore Exchange that will accelerate its move to become the biggest shareholder in F&N, owning a 24.1-per-cent stake, ahead of the 15 per cent owned by Japan’s Kirin Holdings.

The Thai investment prompted Heineken to quickly make a bid for APB. However, a source with knowledge of the Thai bid said these stakes in F&N and APB were bought as a "financial investment".

A source from local alcoholic beverage industry said that the negotiation between Heineken and F&N would be prolonged as existing stakeholders wanted to push the share price of F&N to the maximum level for the highest profit.

"From my own point of view, as a minority shareholder ThaiBev cannot make any strategic move in F&N and APB, or even put their Chang beer in the company’s portfolio and regional distribution network due to common business practice and to avoid conflict of interest with APB’s major beer brands, including Tiger and Heineken," said the source.

Campaign, a well-known media magazine in Singapore revealed that the battle for control of F&N’s stake in APB is getting complicated, with reports surfacing that Coca-Cola has shown interest in F&N’s non-alcoholic beverage business.

While the industry is still waiting for F&N to decide whether it will accept Heineken’s offer of 50 Singapore dollars (Bt1,267) per APB share, which expired yesterday(Friday), the talk in the market is that Coca-Cola is eyeing F&N’s soft drinks unit, which makes F&N Fun Flavors and 100 Plus.

The acquisition, if successful, would give Coca-Cola the biggest share of soft-drink sales in Malaysia and Singapore. Japan’s Kirin Holdings, another stakeholder in F&N, is rumoured to be in the fight with Coca-Cola as well.

Kirin, which has about a 15-per-cent stake in F&N, is also in the mix for the APB stake, competing with Heineken.

Shares in both F&N and APB were suspended yesterday pending a decision on Heineken’s offer.

Banking group OCBC Bank and its insurance subsidiary Great Eastern Holdings agreed to sell their combined stakes in F&N and APB, amounting to 18.1 per cent of the companies, to Thai Beverage (ThaiBev), the brewer of Chang Beer, in a deal worth a total of S$3.2 billion.

The acquisition allows ThaiBev to gain exposure to high-growth Southeast Asian markets. The company is controlled by Charoen’s TCC Group. Charoen and another of his related companies are also buying additional stakes of 11.7 per cent from Lee Rubber Company, OCBC Bank and Great Eastern.

It is understood that F&N is seeking a higher price from Heineken, which already owns a 42-per-cent stake in APB.

Heineken last week set a July 27 deadline for APB’s parent to accept a buy-out but agreed to a one-week extension amid rumours of a potential takeover battle for F&N’s assets involving Thai Beverage and Japan’s Kirin Holdings.

Apart from beer, F&N has major soft-drink and dairy assets along with property, publishing and printing operations.

APB, which sells over 40 beer brands and brand variants, operates 24 breweries in 14 countries, including Singapore, Malaysia, Indonesia, Vietnam, Thailand and Cambodia.

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