Analysts and industry insiders now wait to see whether the players that prompted Heineken’s S$5.1bn ($4.06bn) bid – ThaiBev's offer for a 22% stake in F&N, and a related company bidding for an 8.5% stake in APB, the brewer of Tiger Beer, itself - will react, after their two-pronged S$3.8bn move.
Dutch giant Heineken (2011 turnover: €17.1bn) announced the terms of a massive bid to seize control of APB this morning, at a price of S$50 per share, and said that if the conditions for the offer were satisfied, it would then make a mandatory offer for all outstanding shares for a maximum consideration of S$2.4bn.
Highly attractive offer - Heineken
Heineken already holds a 42% stake in APB, while Japanese rival Kirin Holdings holds 14.7% of F&N. The Dutch firm's CEO and chairman, Jean-François van Boxmeer, said: “We believe that our offer for the APB shares is highly attractive and provides excellent value to F&N and APB shareholders.
“At the same time, taking control of APB will create long-term financial and strategic value for Heineken’s shareholders.”
Andrew Chow, head of research at UOB-Kay Hian in Singapore, told BeverageDaily.com: "Most of us in the market were expecting something to happen, it was unlikely that the status quo would persist. But it was a bit of surprise, how swiftly Heineken moved."
A Singapore-based broker, who did not wish to be named, told this publication: "Personally, I thought that Kirin would have made a move as well. But Japanese being Japanese they can be very thorough and a little slow, so I suspect that is the reason why Heineken made such a fast move."
Asked if Heineken main rationale for the move was to reduce its dependence on flat Western beer markets, the broker added: "APB is one of the larger brewers in Asia, with exposure to Indo-China, Southeast Asia, Australasia, Sri Lanka, China. So it's quite a large footprint - this would be a big deal for Heineken."
Boosting Asian exposure
Western Europe accounts for 35% of Heineken's operating profit (2011 EBIT €962m), whereas comparative percentages for its rivals SABMiller (1%) and AB InBev (8%) are much lower.
A wholesale buyout of APB would be Heineken's first major emerging market move since it bought out Mexican firm FEMSA for $8bn in January 2010; the Dutch firm's 2011 EBIT in Southeast Asia was just €176m.
The broker explained that, under the terms of the JV with F&N, it was not a question of Heineken prevailing over Sirivadhanabhakdi, but whether F&N accepted the offer. "The joint venture is a very tight venture. And if F&N doesn't want to accept, then Heineken can't do anything."
Van Boxmeer said: “We really value our partnership with F&N which goes back over 80 years, but due to changes in the F&N and APB shareholding, the fabric of the partnership has changed. As a result, it is time for us to look ahead to the next chapter of our Asian business, in which Singapore will continue to be our regional headquarters and both the Heineken and Tiger brand will spearhead our brand portfolio in Asia."