Heineken has taken a giant leap forwards in its bid to take full control of Asia Pacific Breweries (APB), after rival ThaiBev and its concert parties said today they would support the Dutch firm’s offer.
In return Heineken has committed not to make a general offer for the shares of major APB shareholder Fraser & Neave (F&N), according to a joint statement issued with ThaiBev and its ally.
With ThaiBev’s support for its S$53/share offer for F&N’s 39.7% stake in APB – and board level approval from F&N for its bid – no major barriers now stand in the way of Heineken securing the simple majority it needs for its offer at F&N’s forthcoming extraordinary general meeting (EGM).
A Heineken spokesman told BeverageDaily.com that the firm was "very pleased that ThaiBev and TCC have chosen to offer irrevocable support to our offer", and agreed that this significantly strengthened Heineken's hand ahead of the September 28 EGM vote.
Keep your enemies close…
A positive outcome for Heineken was thrown into doubt last week by ThaiBev/TCC Assets joint $9bn offer to buy the 70% of F&N shares it does not own, a move analysts said could jeopardize Heineken’s move for APB.
One industry source told this publication that the Heineken/ThaiBev agreement held merits for both parties, and ensured that good relations persisted. "Especially in that part of the world, it is important for Heineken to have good relationships with close competitors," he said.
Chareon Sirivadhanabhakdi, the Thai billionaire chair of ThaiBev is now in pole position to acquire F&N along with its other assets, although this outcome requires that he thrash out an agreement with other major shareholders such as Kirin Holdings (a 15% stakeholder).
Beer business APB – which F&N runs through a JV with Heineken – is regarded as the jewel in F&N’s crown, but the conglomerate also includes thriving soft drinks and dairy divisions, not to mention a property portfolio worth $8bn.
Asked about the value it saw in F&N’s remnants, a ThaiBev spokeswoman told BeverageDaily.com this morning that the firm had nothing to add to the SGX [Singapore Stock Exchange] announcement.
She added: “Following that we have no formal comment for the press. After everything is confirmed and our executives are ready to share more information, perhaps we can speak again.”
‘More skirmishes await’
But Justin Harper, head of research at Singapore-based IG Markets, wrote in a note today: “Many had been gearing up for a tussle between the Thais and Heineken, but Charoen perhaps sees more value in the break-up of F&N, which has seen its share price rise above the S$8.88 offer price.”
Harper added that Charoen could offer Japanese rival Kirin a sweetener to support his F&N bid at the September 28 EGM.
“So it could be a win-win for everyone involved. Heineken gets its prized asset APB and the Thais get a good price that will help fund their F&N takeover,” he wrote.
Shareholders also would unlock the true value of F&N via its break up (and a possible rival bids from Kirin and Coca-Cola), Harper added, while Heineken and ThaiBev might extend their regional distribution via APB.
“The first half is drawing to a close in the F&N football match after an exciting 45 minutes of non-stop action. The second half has the potential to be just as lively if F&N is to be broken up and sold off to the highest bidders. More skirmishes await,” Harper wrote.
ThaiBev shares jumped more than 20% today, he added, “as traders felt it had taken a huge step towards bagging F&N and won’t get involved in a potentially costly dogfight for its assets”.