Chang and Heineken battle hots up for Asia Pacific Brewery shares

08-Aug-2012

A fresh billion-dollar bidding war has erupted for the company behind Singapore's Tiger Beer.

Just when a S$5.1 billion (US$4.11 billion) offer from Dutch brewing giant Heineken to acquire Fraser & Neave's (F&N) breweries stake looked set to go through, a new offer emerged yesterday.

A firm linked to Thai billionaire Charoen Sirivadhanabhakdi - the man behind Chang Beer - has made an unsolicited bid of S$1.03 billion, or S$55 a share, to buy 7.3 per cent of Asia Pacific Breweries (APB) from F&N.

That tops the S$50 per share offered by Heineken, although it is for a smaller stake.

What is shaping up to be one of Singapore's hottest corporate battles started last month when Mr Charoen's Singapore-listed Thai Beverage agreed to pay S$2.8 billion for a 22 per cent stake in F&N, to become its biggest shareholder.

Heineken, which has jointly run APB with F&N since 1931 and worried about the entry of a competing brewer, swiftly responded. It put in a bid for F&N's APB stake at S$50 apiece.

Last Friday, F&N's board accepted Heineken's offer and agreed to recommend that shareholders accept it as well.

Now the latest move upsets the apple cart. Kindest Place Groups, owned by Charoen's son-in-law, is offering to buy 18.75 million APB shares from F&N. The offer will lapse at 5pm on Thursday next week.

"The board of the company will review and evaluate the offer," said F&N in a statement.

Kindest Place's offer is for a much smaller stake of APB than Heineken's bid. It is seeking only F&N's 7.3 per cent direct stake in APB, whereas Heineken wants F&N's stake in Asia Pacific Investment and its direct APB stake.

Asia Pacific Investment is the joint venture between Heineken and F&N that holds the bulk of APB shares. In all, F&N has a deemed and direct stake of about 40 per cent of the brewer.

Market observers read the move as one to force a rethink by F&N's board, owing to the higher per-share valuation of APB. The board may have to ask Heineken for a better price, observers say.

It may be a tactic by the Thais to delay Heineken's takeover of APB. It may also be an attempt to make sure they get into a better bargaining position.

Kindest Place already has 8.6 per cent of APB from OCBC Bank and Great Eastern, so the offer for another 7.3 per cent could raise this to about 16 per cent.

"This is all about forcing Heineken to increase its offer," said Jonathan Foster, Singapore-based director of global special situations at Religare, Bloom- berg reported.

"Heineken's offer is for F&N's total 39.7 per cent effective stake, direct and indirect, in APB. This includes the 7.3 per cent that an offer has been made for."

The Dutch brewer said it will continue to negotiate the sale and purchase agreement with F&N.