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Thai tycoon won't block Heineken's bid for APB

Publication Date : 20-09-2012

 

Thai billionaire Charoen Sirivadhanabhakdi stunned market watchers yesterday when he agreed to back the sale of Fraser & Neave's stake in Asia Pacific Breweries (APB) to Heineken.

Analysts agree that it is now all but certain that Tiger beer will end up being part of the Dutch brewer's stable of brands.

The unexpected decision - it came at 4am yesterday in the form of an announcement to the Singapore Exchange (SGX) - has effectively ended a high-stakes stand-off that has enthralled corporate Singapore.

There had been talk that Charoen would use his voting power to try to block F&N's sale of APB as a way to grow his own beer assets - Thai Beverage.

Market watchers were anticipating the showdown - at a September 28 F&N shareholders' meeting - with undisguised relish but no more.

Charoen's decision yesterday has taken the heat out of the event and clears the way for Heineken to take over APB.

Heineken has in turn undertaken not to make a general offer for F&N, according to the SGX announcement.

This also paves the way for the conglomerate, Singapore-owned for 129 years with thriving assets in soft drinks, dairies, publishing, property and a separate brewery stake in Myanmar, to be part of Charoen's business empire.

"In terms of corporate takeovers, this has been the most gripping in recent years," said CIMB Research executive director Song Seng Wun. "This draws a line in the sand so everybody can walk away reasonably happy with the outcome."

The battle for F&N started in July when ThaiBev bought a stake in F&N while a related party took up a direct stake in APB.

Heineken defended its turf and had a S$5.4 billion (US$4.41 billion) offer for F&N's stake in APB accepted. Heineken started APB as a joint venture with F&N in 1931, both developing it into a regional beer powerhouse of 30 breweries in 14 countries across the region with Tiger beer as the flagship brew.

But last Thursday, Mr Charoen offered S$8.8 billion for the 70 per cent of F&N not controlled by himself. That seemed to show that he wanted to build up enough shares to halt the sale of the APB shares at the September 28 meeting, which has been moved to a larger venue, given the interest.

But it now appears that the rest of F&N, with a strong distribution network across the region, is enough for Charoen. Kindest Place Groups, the vehicle linked to Charoen that holds an APB stake, has already agreed to sell the shares to Heineken, the Dutch brewer said yesterday evening.

The 8.6 per cent holding will be sold at S$53 per share, giving Kindest Place a tidy profit on stock it bought at S$45 in July.

Pub operators seem unperturbed by the prospect of APB, and especially its famous Tiger beer, falling into Dutch hands.

"Traditionally we've always associated Heineken with APB," said Mohan Mulani, executive chairman of bar chain Harry's.

"Any change (to a new Thai owner) is a bit uncertain. Now that the path is clear for Heineken, I think it's a positive outcome."

Joseph Baladi, chief executive of brand consulting firm BrandAsian, said Heineken is likely to continue growing the Tiger beer brand rather than let it sit on a back-burner.

 

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