Heineken takes major step to Tiger beer deal

DUTCH BREWER Heineken took a major step towards winning control of the Tiger beer brand and an Asian brewing network yesterday after a Thai rival accepted the deal.

Billionaire Charoen Sirivadhanabhakdi’s Thai Beverage and TCC Assets said they would vote in favour of the sale of Singapore conglomerate Fraser and Neave’s stake in Asia Pacific Breweries to Heineken.

In return, Heineken, the world’s third-largest brewer, will not make an offer for shares in FN.

The deal between the Thais – the largest FN shareholders with a near 31 per cent stake – and the Dutch brewer ended a two-month standoff involving competing offers for control of APB.

After the agreement, Heineken also said it would buy an 8.6 per cent direct stake in APB owned by Sirivadhanabhakdi’s son-in-law through his company Kindest Place Group.

Heineken, already sharing control of APB through an 81-year-old venture with FN, now seems set to take full control of the brewer and protect its turf in Asia’s fast-growing beer market.

“This is settlement talk, to prevent any further escalation of the fight for FN or APB, which will cost more for both parties if it goes on,” said Goh Han Peng, an analyst at DMG Partners Securities in Singapore.

Once Sirivadhanabhakdi had agreed to support Heineken, it was logical that Kindest Place would also want to sell its part, analyst Wim Hoste at KBC Securities said.

Heineken shares rose as much as 6.4 per cent to €45.585, a seven-week high, and were the strongest performers in the FTSEurofirst 300 index of leading European stocks. Brokers said Heineken is paying a steep price for a deal with limited synergy benefits or revenue gains, given it is already operating APB’s business.

However, likely borrowing costs for Heineken of only about 3 per cent and high growth potential means the deal should immediately boost earnings. APB’s revenue has risen 49 per cent in the past two years.

FNs board has backed the deal and its shareholders are due to vote on the proposed sale of its 40 per cent stake in APB to Heineken at an extraordinary general meeting (egm) on September 28th. – (Reuters)