Fraser & Neave Shareholders Ok Heineken's Bid for APB

SINGAPORE--Shareholders of Fraser & Neave Ltd. (F99.SG) Friday agreed to sell their stake in a beer joint venture to Heineken N.V. (HINKY, HEIA.AE) for about $4.6 billion, ending a two-month saga in which the Dutch brewer's bid to strengthen its foothold in the lucrative Asian beer market looked to be threatened by a reclusive Thai billionaire.

The decision, passed at a meeting of F&N shareholders, paves the way for Heineken to take full control of Asia Pacific Breweries Ltd. (A46.SG), the maker of Tiger Beer and one of Asia's most profitable beer businesses. As of Friday, F&N owns 39.7% of APB, while the Dutch brewer owns 55.64%.

The deal would give Heineken control over the Tiger and Bintang APB beer brands, which make up nearly 50% of the beer market in Indonesia, Malaysia and Singapore, according to data provider Euromonitor.

The race to gain control of APB started in mid-July when Mr. Charoen Sirivadhanabhakdi began buying stakes in F&N as well as APB, respectively through his beer outfit Thai Beverage PCL (Y92.SG) and Kindest Place Groups, a vehicle linked to his son-in-law.

The Thai tycoon's purchase of stakes in F&N and APB prompted Heineken to try to wrest control of its 81-year-old joint venture with the Singapore conglomerate. The Dutch firm in July made a 5.1 billion Singapore dollar ($4.2 billion) offer for the whole of APB, sweetening that bid to S$5.6 billion a month later.

But as Heineken awaited the outcome of the F&N shareholder meeting, Mr. Charoen's entities continued to complicate matters and built up stakes in F&N, which also owns property and soft drinks businesses. Mr. Charoen on Sept. 13 made a $7.2 billion offer to take full control of F&N, prompting market speculation of a brewing battle between the Thai tycoon and Heineken for control of APB.

However, on Sept. 19, Mr. Charoen put the speculation to rest after his companies said they would support Heineken's bid for APB.

Though Fraser & Neave's beer assets were his first focus, people who know Mr. Charoen say he now has his eye on the Singapore company's property portfolio and a regional distribution network driven by its soft-drinks business. Together, analysts said, those assets can help Mr. Charoen create a business that doesn't rely on shipping a huge volume of rice-liquor back home to rural Thailand.

F&N's property assets include residential, office, retail and hospitality properties spanning Asia, while its soft drinks business sells beverages like the popular 100 Plus sports drink. Mr. Charoen's TCC Group includes property developer TCC Land, although his business interests are mainly focused on Thailand.

F&N has appointed Goldman Sachs and JP Morgan as its advisers on Mr. Charoen's takeover offer.

At Friday's meeting, some 98.73% of F&N shareholders voted in favor of Heineken's offer, with just 1.27% rejecting the deal. Singapore regulators will also have to sign off on Heineken's bid before the Dutch brewer gets full control of the Singapore-listed firm's 30 breweries and 40 brands spanning 14 Asian countries.

Analysts said that Heineken's offer comes at a high price, valuing APB at a price-to-earnings ratio of 35.1. This is well above the 20.3 for Carlsberg Brewery Malaysia Bhd. (2836.KU), and 16.6 times for Japan's Sapporo Holdings Ltd. (2501.TO).

Write to P.R. Venkat at [e-mail]

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