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Thai tycoon gives up bid for Asia Pacific Breweries to chase F&N

Publication Date : 20-09-2012


Thai tycoon Charoen Sirivadhanabhakdi has apparently made a key decision in expanding his overseas interests: letting go of Asia Pacific Breweries (APB) and getting the maximum possible benefit out of Singapore's Fraser & Neave (F&N).

Thai Beverage Plc and TCC Assets Ltd (TCCA) - two firms majority-owned by Charoen and his wife, Khunying Wanna - yesterday announced that at the upcoming meeting of F&N shareholders they would vote for the sale of APB to Heineken. This would cover the direct and indirect interests of F&N in the brewer.

In return for this promise, "Heineken irrevocably undertakes not to make a general offer for shares in F&N under the Singapore Code on take-overs and mergers," according to the joint statement filed at the Singapore Exchange.

The combined stake of ThaiBev and TCCA in F&N reached 30.36 per cent last Thursday. TCCA is launching an offer to buy all remaining shares in F&N on the open market. Other major shareholders of F&N include Kirin International Holdings, Japan's second largest brewer, which has so far avoided the takeover wrangling.

F&N holds 40 per cent of APB via direct and indirect interests. APB is the maker of Tiger beer, with breweries in 14 countries. Heineken's stake in APB is about the same.

Charoen's decision ends the months-long competition between ThaiBev - the maker of Chang beer and Thailand’s largest brewer by volume - and Heineken, the world's third largest brewer.

Thapana Sirivadhanabhakdi, chief executive officer of ThaiBev and eldest son of Charoen, said earlier in an interview with The Nation that F&N is a piece in the puzzle of Charoen's strategy to expand his business overseas. With strong cash flow, management know-how and the solid regional distribution network of F&N, Charoen's businesses in Thailand can be jump-started into a global expansion. Under these strategies, Charoen is eyeing not only Asia, but also opportunities throughout the world.

Last week, TCCA's offer for all shares in F&N not held by ThaiBev affirmed Charoen's dire need for a larger presence in the Singapore food-and-drink company.

For its 29-per-cent stake in F&B, ThaiBev spent about 3.9 billion Singapore dollars (approximately 98 billion baht or US$3.17 billion). Moody's Investors Service, which has puts ThaiBev's rating on review for a possible downgrade, said yesterday that the F&N shareholder resolution on September 28 would play a critical role in its assessment of ThaiBev's future credit profile.

Charoen's group stands to reap a huge gain from the decision to end fighting with Heineken. Kindest Place Groups - a unit of Charoen's liquor empire - bought 8.6 per cent of the shares in APB for below S$50 apiece, but its bid to compete against Heineken forced the Dutch brewer to raise its offer for APB shares to S$53 per share. In effect, Charoen stands to book billions in disposable gain. And now, he can refocus on putting F&N into the main jigsaw.

His firm - Thai Charoen Corporation (TCC) Group - has interests ranging from insurance to property and consumer products, as well as ThaiBev. TCC Group holds 70 per cent of Thailand-listed Berli Jucker, which has operations in trading and consumer products. The conglomerate also controls unlisted property investor and developer TCC Land. There is an insurance business under TCC Capital, and a sugar operation.

F&N itself is a sprawling empire of property, beer, soft drinks and bookshops. DMG & Partners Securities noted earlier that "in many ways, F&N offers a solid regional platform for ThaiBev to accelerate its regionalisation strategy in both its brewery and non-brewery businesses. Cross-selling opportunities between Thailand and overseas markets in beer and non-alcoholic businesses could create meaningful revenue synergies for the enlarged group."


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