Heineken closes in on Singapore takeover target in potential S$7.5bn deal

F&N announced this afternoon (Central European Time) that it has agreed to recommend to its shareholders that they vote in favor of the proposed transaction at a relevant extraordinary shareholders meeting (EGM), with the date to be confirmed pending the signing of sales purchase agreements.

The transaction could be worth up to S$7.6bn (US $6.1bn), where its terms comprise Heineken's S$5.263bn offer for F&N's stakes in APB and F&N's interest in non-APV assets held by Asia Pacific Investment Partners.

Subject to takeover approval, F&N's acceptance of Heineken's offer will trigger a mandatory offer on its part for APB's remaining shares for up S$2.4bn.

Heineken spokesman, John Clarke told BeverageDaily.com: "It's a bit early to discuss what the transaction would mean to us in terms of opportunities and impacts.​

"But obviously we're delighted at where we've got to now in terms of the recommendation. It's a high-growth region, both in terms of the premium segment there, and Heineken is already very strong in the region. Tiger is a great brand - there's plenty of opportunity."​

Transformational deal​

Heineken said that the agreement – that will lend it control of APB's 24 breweries in 14 Southeast Asian countries and brand such as Tiger, Anchor and Bintang - remained subject to the successful negotiation of definite transaction documents between the Dutch brewer and F&N.

Asked how transformational he thought the deal was for Heineken, London-based analyst for Oriel Securities, Chris Wickham told this publication: "Well, at the end of the day it's something that they [Heineken] have always wanted to do.​

"That's definitely the case. To take greater control over these cash-generating growth assets."​

Another analyst, who didn't wish to be named, told BeverageDaily.com: "I think what they [Heineken] are paying a fairly good price. I mean, I don't know if the profits are there for that business, as much as you're paying for future growth. ​

"So I think they may have paid a very nice stake, but it's not too surprising that F&N simply took it. I have a feeling that F&N would also have had a sense of whether someone such as Kirin or another player was going to come in and bid."​

AB InBev ramps up pressure...​

So did the analyst believe that Heineken had been under pressure to pull off a large deal, given AB InBev's successful $20bn bid for the half of Mexican brewer Grupo Modelo that it didn't own in late June, and with the number of attractive takeover targets in key emerging markets diminishing?

"Absolutely. That's what SAB Miller would have said about Heineken buying in Mexico [the Dutch brewer's $7.7bn purchase of Grupo Modelo's main rival FEMSA in January 2010]. That was a similar situation. If you keep missing out on things, you run the risk of their not being much left. ​

"APB was Heineken's main exposure to Asia so if somehow they had left control of this, that would have been a major problem for them."​

As for what the deal meant for Heineken's rivals in Asia? "It cuts off a potential avenue for acquisitional expansion, but in terms of day-to-day operations, it probably won't mean that much. What APB is doing on the ground won't be changing that much," ​the analyst said.