Heineken clears Thai hurdle to buy Singapore brewer APB

Thai Beverage (ThaiBev) and TCC Assets, both controlled by tycoon Charoen Sirivadhanabhakdi, said in a joint statement with Heineken that they will support the Dutch firm's bid to gain control of Asia-Pacific Breweries.

Heineken in turn promised not to make a counter-offer for APB's parent company Fraser and Neave (F&N), which the Thais want to take over.

"Heineken is now in touching distance of acquiring APB after this surprise backdown by ThaiBev," said Justin Harper, an analyst with IG Markets Singapore.

"There will be a huge sigh of relief coming from Holland (Netherlands) this morning," he told AFP.

Heineken already owns 42% of Singapore-based APB and offered Sg$5.6 billion ($4.6 billion) for the 40% stake held by F&N.

This has to be ratified at an extraordinary general meeting of F&N shareholders on September 28.

Until Wednesday's compromise was announced, Heineken's bid was in doubt after ThaiBev and TCC Assets, which jointly own 30% of F&N, last week offered other owners Sg$8.7 billion to take over the group.

In the joint statement to the Singapore Exchange, the Thais promised to vote in favour of Heineken's offer while the Dutch brewer said it "irrevocably undertakes not to make a general offer" for F&N, in which it has no stake.

Heineken had been forced to raise its original offer price of Sg$50 a share for APB shares to fend off the Thai billionaire and parties linked to him which were building up stakes in the Singapore brewer.

Shares of APB reached a morning high of Sg$53.05 in Singapore after Wednesday's joint announcement.

APB, the crown jewel of F&N, makes Tiger Beer and other popular brands in Asia, where beer consumption is rapidly growing as sales taper off in mature markets like Europe, Heineken's traditional base.

ThaiBev makes Chang Beer and is also involved in food and non-alcoholic drinks.

According to Forbes business magazine, Charoen is the third richest person in Thailand with an estimated fortune of $6.2 billion as of August, with the bulk of his money coming from his beverage business.

By agreeing to vote in favor of selling F&N's stake in APB, the Thais will gain a payout that will help finance their takeover of F&N, which is also involved in property, soft drinks and publishing, another analyst said.

"Price inflation may have been so rapid that it may be better to sell the (APB) stake and grab the non-beer business of F&N," said Xavier Jean, associate director of corporate ratings with credit ratings firm Standard and Poor's.

"It's not as profitable as beer and the growth potential is not as high, but it sits very nicely in terms of product diversification into non-alcoholic beverages and geographic diversification outside of Thailand."

APB, which has breweries in 14 countries including China, reported in August that its revenues for the third quarter to June rose almost 10% to Sg$781.33 million from a year ago.

A Heineken takeover of APB would give it an edge over other rivals in Southeast Asia as well as China.

Beer consumption in nine of the 10 Southeast Asian countries totalled 6.84 billion litres in 2011, up more than 6% from 2010, with Vietnam, Thailand and the Philippines leading the market, data from research firm Euromonitor showed.

Source: AFP