Battle for Singapore brewer shows rise of ASEAN market
2012-08-08 17:42:06
A nascent bidding war for a Singapore brewer between Dutch giant Heineken and Thai rivals underscores the growing importance of Southeast Asia's consumer market to global firms, analysts said Wednesday.
In a surprise move, a Thai company linked to beverages tycoon Charoen Sirivadhanabhakdi on Tuesday offered S$55 (US$44.34) for an additional 7.3 per cent stake in Asia Pacific Breweries (APB), the makers of Tiger Beer.
This was 10 per cent higher than the S$50 per share offered by Heineken, which already owns 42 per cent of APB, for the 40 per cent stake held directly and indirectly by its longtime partner Fraser and Neave (F&N).
"The new Thai bid for the Fraser & Neave stake in Asia Pacific Breweries reflects a broader trend of the ascendancy of Asian multinationals," said Rajiv Biswas, Asia-Pacific chief economist at research group IHS Global Insight.
"This is evident in the global brewing industry, with companies from Japan, China, Thailand and the Philippines building their global footprint and competing fiercely with North American and European firms."
Heineken said Wednesday it was prepared to spend S$7.7 billion for a full takeover of APB, including S$5.1 billion it offered to pay for the F&N stake and payments to the rest of the shareholders.
Analysts however say the Amsterdam-based firm is now under pressure to improve its proposal before an extraordinary general meeting of F&N shareholders.
The industry is also waiting for the next move by the Thai faction.
"We believe a bidding war has begun," Malaysian bank CIMB said in a note.
Charoen's Thai Beverage group already owns around 24 per cent of F&N. The company that made the unsolicited S$1.03 billion bid for APB shares, Kindest Place, is owned by a son-in-law of the tycoon and already has 8.6 per cent of APB.
Heineken hopes a successful takeover of APB would give it a leg up over rivals in the 10-member Association of Southeast Asian Nations (ASEAN) market of some 600 million consumers.
Apart from Tiger, brands like Thai Beverage's Chang Beer, San Miguel from the Philippines and Indonesia's Bintang, also owned by APB, are competing with Heineken, Denmark's Carlsberg and other brands from developed economies.
APB reported revenues of S$773.42 million in its second quarter ending March 31, up 15 per cent from a year ago, with most sales generated in ASEAN.
Beer consumption in nine ASEAN countries totalled 6.84 billion litres in 2011, up around 6.2 per cent from 2010, with Vietnam, Thailand and the Philippines leading the market, data from research firm Euromonitor showed.
"With ASEAN GDP forecast to rise from US$2.3 trillion in 2012 to US$10 trillion by 2030, ASEAN is one of the world's fastest growing consumer markets, making it a key battleground for competition between Asian beverage companies and their Western competitors," Biswas told AFP.
Heineken said Wednesday that it was still in talks with F&N.
DMG & Partners Securities said its expects F&N to take into account the fact that the Thai offer is only for a portion of its APB stake and not as comprehensive as Heineken's.
Xavier Jean, Singapore-based associate director for corporate ratings practice at credit rating agency Standard and Poor's, said Heineken, because of its sheer size, is better placed to fund a full takeover of APB.
But he also noted that Kindest Place and Thai Beverage can borrow from the capital markets to finance a counter-offer.
"They could probably find the resources, it's just a matter of how much risk and debt they want to take on. Heineken is a significantly larger company," he told AFP.