Heineken won control on Friday of the Asian group which brews Tiger beer when Singapore’s Fraser and Neave (F&N) agreed to sell its stake in the firm for $5.1 billion, a deal which will help boost the Dutch group’s Asian growth.
The purchase gives Heineken 82% of the prized Asia Pacific Breweries (APB) and it will now launch an offer for the rest of the company, while F&N, a drinks and property group, could be broken up eventually.
Amsterdam-based Heineken already owned 42% of APB, which runs 24 Asian breweries, and buying F&N’s 40% stake will help it to defend its turf which is under threat from Thailand’s second-richest man.
F&N’s board, whose chairman Lee Hsien Yang is the younger son of Singapore’s elder statesman Lee Kuan Yew, will recommend the $50 an APB share deal to its shareholders, Heineken said in a statement.
The Dutch company will now mop up minority shareholders at a similar price to make the total purchase worth about US$6 billion.
Control of APB is vital for Heineken, the world’s third largest brewer, as this will raise the proportion of its total profits from the fast-growing Asian market to 15% from 6%, while boosting the growth rate of the whole group.
By winning APB, Heineken gets ownership of Tiger, Bintang, Anchor and other brands of beer plus two dozen breweries in 14 countries including Singapore, Malaysia, Indonesia, Vietnam, Thailand and Cambodia. However, the biggest brand APB brews is Heineken itself, which accounts for 30% of its volumes.
Heineken shares jumped to a record high earlier after Reuters reported the deal, and when official confirmation came through later they hit a fresh high of 46.30 euros. They were up 3.6% at 46.03 euros by 1355 GMT.
The Dutch group had given F&N a Friday deadline to agree a sale after a two-week offer period, and both F&N and ABP shares were suspended on Thursday and Friday as a deal appeared close.
THAI RIVAL
Heineken began brewing Tiger with F&N in the 1930s but that partnership hit the rocks after Thai Beverage and others linked to Thai billionaire Charoen Sirivadhanabhakdi bought stakes in F&N and APB for US$3 billion last month.
The investment by Charoen, who is seeking to expand his own Chang beer business in Asia, pushed Heineken into an offer for APB as it saw its position in Asia coming under threat.
The Heineken deal could prompt a breakup of F&N with Coca-Cola keeping an eye on its popular soft-drink 100PLUS, fruit juices, mineral water and dairy products unit which could be hived off from the Singapore group’s property assets.
That could pit Coca-Cola against two sizeable Asian brewers, Thai Beverage and Japan’s Kirin Holdings, which have their own interests to protect as F&N shareholders.
F&N shares have jumped 31.5% this year to close at $8.15 on Wednesday but have come off a record $8.49. APB shares, which last traded at $49.50, have surged 71.9% since the start of the year, and the offer price of $50 was at a 45% premium to month ago levels.
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