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Heineken wins control of Tiger beer maker in $6.4-B deal

(The Philippine Star) - September 29, 2012 - 12:00am

SINGAPORE (Reuters) - Heineken NV won full control of the maker of Tiger beer in a S$7.9 billion ($6.4 billion) deal on Friday after shareholders of its Asian partner, Fraser and Neave Ltd (F&N), voted in favor of selling the conglomerate’s stake in the brewer.

The vote ends a two-month battle between Heineken and companies linked to Thai billionaire Charoen Sirivadhanabhakdi for control of Asia Pacific Breweries (APB), which makes several other popular brands of beer and operates 30 breweries across 14 countries.

The spotlight is now on F&N over a $7.2-billion bid for the rest of the conglomerate by Charoen through Thai Beverage PCL and TCC Assets Ltd. The Thais control 30.7 percent of F&N, which will remain a large player in the property and soft drinks businesses after the APB sale.

The Thais could have tried to block the sale of F&N’s 40 percent stake in APB to Heineken but said last week they would vote in favor of the deal. The Dutch brewer, in turn, agreed not to make a competing bid for control of F&N.

Heineken, already the owner of nearly 56 percent of APB through an 81-year-old venture with F&N, sought full control of the brewer to ward off Charoen’s advances and protect its interests in Asia’s fast-growing beer market.

The Dutch brewer said on Friday it had sufficient cash and financing to buy the rest of APB, and that average acquisition financing costs were expected to be less than percent a year.

While the Thais have given their approval for the APB sale, they are not yet ready to funnel back the proceeds to shareholders.

A proposal by F&N’s board to pay out S$4 billion ($3.3 billion) to shareholders via a capital reduction failed at the shareholders’ meeting due to opposition from the Thais. The motion required 75 percent support but got only 54 percent.

Excluding the Thai votes, 91 percent of shareholders voted for the capital reduction, according to an F&N spokeswoman.

“This move gives ThaiBev and TCC greater influence over the use of proceeds from the APB divestment as F&N’s largest single shareholder,” Deutsche Bank analyst Gregory Lui said in a client note seen by Reuters.

“ThaiBev/TCC could use the capital to fund acquisitions to grow F&N’s business, or to make distributions which may be more amenable to ThaiBev/TCC.”

By keeping the S$4 billion within F&N, the Thais would also make it more expensive for a third party to launch a counterbid for the conglomerate, other analysts and bankers have said.

The Thai group’s offer for the rest of F&N that it does not own expires on Oct. 29.

F&N shares were down 0.2 percent at S$8.87 after a trading halt was lifted.

“This sale, which is at a very attractive valuation, allows F&N to immediately monetize a substantial value of our beer interests and maximizes overall returns to shareholders,” said F&N chairman Lee Hsien Yang in a statement.

AMP APB ASIA PACIFIC BREWERIES ASSETS LTD CHAROEN CHAROEN SIRIVADHANABHAKDI DEUTSCHE BANK EXCLUDING THE THAI HEINEKEN
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