Tiger and Heineken

Heineken to Buy Tiger Beer Maker for $4.1 Billion

Deal expands the brewer’s Asian presence as demand wanes in Western Europe.

Dutch brewer Heineken (IW 1000/177) said Friday it has reached a deal to buy the Asian brewing group that makes Tiger beer for $4.1 billion, as it seeks to bolster its presence in the fast-growing region.

Heineken said Singapore-listed Fraser & Neave (F&N) has accepted its offer to acquire its stake in Asia Pacific Breweries (APB), adding that the F&N board has agreed to recommend the Sg$5.1 billion deal to shareholders.

Heineken had earlier said a takeover of APB -- which makes Tiger beer and other brands popular across Asia, including the Chinese market -- would give it direct access to the region.

Heineken currently owns 41.9% of APB, one of Southeast Asia's biggest brewers, and taking F&N's 40% will give the Amsterdam company a distinctive edge over Thai Beverage Ltd., owned by tycoon Charoen Sirivadhanabhakdi.

Kindest Place, a company owned by a son-in-law of Charoen, holds 8.6% in APB, leaving around 9% free-floating on the Singapore Exchange where APB is listed.

APB shares reached as high as Sg$52.00 after Heineken first announced its takeover bid on July 20. The shares closed at Sg$49.50 on Wednesday before trading was suspended pending Friday's decision on the offer.

A successful deal will bring Heineken's stake in APB to nearly 82%, more than enough to trigger a mandatory offer for the shares it does not already own.

A Complicated Ownership Structure

In a complicated ownership structure, Thai Beverage and Japanese brewer Kirin together have a 39.1% stake in F&N and their votes will be a crucial factor for the Heineken offer to be successful, Dow Jones Newswires reported.

In a statement released in Amsterdam, Heineken said it had offered to buy all of F&N's shares in APB for Sg$50 apiece, a premium of 45% over the one-month volume weighted average price per share, for a total of Sg$5.1 billion.

"We proposed a highly attractive offer to Fraser & Neave's board and we are delighted that they have now recommended it to the shareholders," Heineken spokesman John Clarke told AFP.

F&N chairman Lee Hsien Yang described the Heineken offer as a "validation" of APB's success, its business model, leading brands and strong management team.

"While all of us at F&N maintain a strong emotional attachment to APB and the Tiger beer brand, this offer price of Sg$50 represents an attractive premium," Lee said in a statement.

He added that "the sale of APB allows us to immediately unlock substantial value in the beer business, which is consistent with our intent to maximize returns for F&N shareholders."

Analysts have said a stronger Asian presence is important for Heineken as demand wanes in Western Europe.

F&N said APB operates an extensive global marketing network spread across 60 countries.

This network is supported by 30 breweries in 14 countries including Singapore, Cambodia, China, Indonesia, Laos, Malaysia, Mongolia, New Caledonia, New Zealand, Papua New Guinea, Solomon Islands, Sri Lanka, Thailand and Vietnam, it said.

Data from international business consultancy Euromonitor showed that the Asia Pacific is the biggest beer market in the world, accounting for 35.3% of the total volume last year, up from 34.4% in 2010.

Total volume in 2011 at 66.97 million liters is expected to rise to 84.55 million liters by 2016, Euromonitor said.

Analysts had said that Heineken's offer could spark a takeover battle with Thai and Japanese investors for control of APB.

But Senji Miyake, president of Japanese brewer Kirin which owns 14.7% of F&N, said in Tokyo earlier Friday that his company was not interested in taking control of APB, Dow Jones said.

-- Martin Abbugao, AFP

Copyright Agence France-Presse, 2012

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