September 18, 2012 / 9:58 PM / 6 years ago

Heineken nears Tiger beer deal after ThaiBev acceptance

BRUSSELS (Reuters) - Dutch brewer Heineken (HEIN.AS) took a major step towards taking control of Asia’s Tiger beer by securing acceptance from a Thai billionaire who had been viewed for weeks as a spoiling rival.

Bottles of Tiger and Heineken beers are pictured on the shelf of a grocery store in Singapore July 20, 2012. REUTERS/Tim Chong

Charoen Sirivadhanabhakdi’s ThaiBev (TBEV.SI) and TCC Assets Ltd agreed to support the sale of Singapore conglomerate Fraser and Neave’s (FRNM.SI) stake in Tiger beer maker Asia Pacific Breweries Ltd APBB.SI to Heineken NV (HEIN.AS).

In return, the world’s third-largest brewer will not make a general offer for shares in F&N, according to the joint statement by the Thai companies and Heineken released late Tuesday European time and in the early hours of Wednesday in Asia.

Charoen, whose companies own just below 31 percent of F&N, launched a $7.2 billion offer last week to acquire the rest, a move seen at the time as possibly derailing Heineken’s $6.3 billion bid to buy out the holdings of F&N and others in APB.

After two months of steadily higher offers for F&N and APB, bound together by a complex ownership structure, the Thais and the Dutch brewer ended their standoff.

Now Heineken, the world’s third largest brewer, appears on course to succeed in taking full control of APB. F&N’s board has already backed the deal and F&N shareholders will vote on Sept 28.

PRECURSOR OF F&N BREAK-UP?

Heineken described the deal as a good next step, although it will also need other shareholders to vote in favor.

“It significantly improves our level of certainty that our offer will be accepted,” said Heineken spokesman John-Paul Schuirink.

Shareholders may be persuaded to back the Heineken deal by the proposal of F&N’s board to use the proceeds to pay out S$4 billion ($3.27 billion) through a capital reduction.

F&N’s other large shareholders include Japan’s Kirin Holdings Co Ltd (2503.T), with a near 15 percent stake. Kirin has previously said it is interested in F&N’s food and non-alcoholic drinks business.

At S$53 per share, Heineken’s offer is regarded as generous by many analysts - some 18 times core profits (EBITDA), above the 15.4 times paid by Anheuser-Busch InBev (ABI.BR) to take control of Mexico’s Modelo in June.

APB shares closed on Tuesday at S$53.09.

In turn, the path is clear for Charoen, Thailand’s third-richest man, to profit from the Heineken payout and expand in Asian property and soft drinks - the main businesses left in F&N after the sale of its beer interests.

However, industry watchers say the Thais may need to pay more than their current offer of S$8.88 per share if they are serious about gaining control of F&N. Its shares closed on Tuesday at S$8.97.

The TCC offer, backed by loans from Singapore banks DBS Group Holdings Ltd (DBSM.SI) and United Overseas Bank Ltd (UOBH.SI), will not be formally presented to shareholders for another couple of weeks.

The divestment of its brewing assets and the offer from the Thais could force a full break-up of Fraser and Neave.

The Thais recently bought out Pepsi’s bottling business in Thailand and Charoen already has substantial property investments in Singapore.

F&N’s property portfolio, worth more than S$8 billion, has also attracted the interest of Blackstone Group LP (BX.N) and other global property companies, sources have told Reuters, while the beverage business could appeal to potential suitors including Coca-Cola Co (KO.N). ($1 = 1.2251 Singapore dollars)

Additional reporting by Juhi Arora in Bangalore, Editing by Anthony Kurian, David Gregorio, Gary Hill

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