Thai billionaire muscles in on Heineken deal

Aug 07, 2012, 5:45 PM EDT
REUTERS/Tim Chong/Files


* Thai bidder makes offer for F&N's direct stake in APB

* Kindest Place offers S$55/share for the F&N stake

* Heineken claims its bid is better for F&N shareholders

* Heineken shares fall 2.4 percent in Europe

By Saeed Azhar and David Jones

SINGAPORE/LONDON, Aug 7 (Reuters) - Heineken's $6billion bid for Asia Pacific Breweries (APB) faces achallenge from a group linked to Thai billionaire CharoenSirivadhanabhakdi, which could force the Dutch brewer to paymore to control the maker of Tiger beer.

The world's third biggest brewer has to decide whether toraise its bid or risk losing control of one of Asia's fastestgrowing brewers to the family of Thailand's second richest man.

Heineken agreed to buy stakes in the Asian brewer held bySingapore conglomerate Fraser and Neave (F&N) lastFriday, only for the Thai group to muscle in on the deal onTuesday with a higher price for F&N's 7.3 percent direct stake.

Kindest Place Groups, a vehicle owned by Charoen'sson-in-law, made a surprise offer of S$55 a share to buy F&N'sdirect stake in APB, S$5 a share more than Heineken agreed topay in its deal announced last week. F&N controls around 40percent of APB, mostly via a joint venture with Heineken.

The Thai companies, ThaiBev and Kindest Place, had alreadyput Heineken on the back foot last month when they paid $3billion to take stakes in F&N and APB.

Heineken, which controls 42 percent of APB, agreed to payF&N S$50 a share for its APB stake which values it at S$5.1billion ($4.1 billion). The Heineken deal is worth around $6billion if a buyout of minority shareholders is included.

Heineken's APB bid is already at a rich multiple of 17.4times (EBITDA) core profits, above the 15.4 times paid byAnheuser Busch InBev for Mexico's Modelo in June.

The Amsterdam-based brewer put a brave face on the situationsaying its bid was better than the Thai offer.

"We are convinced that our bid is richer and offers morevalue to shareholders," said a Heineken spokesman.

Heineken shares fell to close 2.4 percent lower at 44.38euros on worries about the prospect of a bidding war with thepowerful Thai business family which could be pushing to controlAPB or just extract a higher price for its stake.

"With this latest turn of events, Heineken's current offerwill fail. It will have to offer more than S$55 per share tooutbid the Thai group, possibly S$60 per share," said Goh HanPeng, analyst at DMG & Partners Securities in Singapore.

If Kindest Place's offer succeeds, it will control more than15 percent of APB, having already agreed to buy 7.9 percent ofthe beer maker from Oversea-Chinese Banking Corp andits insurance unit Great Eastern Holdings last monthat a lower price of S$45 a share.

Charoen can also try and block the full sale of APB toHeineken by voting against the deal through Thai Beverage PCL, which he controls. ThaiBev, the maker of Chang beer,is F&N's biggest shareholder with about 24 percent.

Analysts say Charoen recognises the value of the APB business, which has a dominant position in most markets where itoperates such as Vietnam and Singapore, and is expected to enjoy a rising stream of profits for many years to come.

Charoen and ThaiBev had not previously indicated whetherthey supported or opposed the sale of APB to Heineken.

Japanese beermaker Kirin, F&N's second-largestshareholder with about 15 percent, has also not made its viewsknown, although analysts believe it may be interested in F&N'ssoft drink interests rather than its brewing.

F&N said Kindest Place's offer will lapse at 5:00 pmSingapore time on Aug. 16.