ThaiBev Winning in Tussle with Heineken over APB

Following up on the news of ThaiBev’s plan to expand globally, the company is poised to see big gains in a tussle with Heineken NV over Asia Pacific Breweries Ltd (APB), the maker of Tiger and other beers across Southeast Asia. 

Charoen Sirivadhanabhakdi, who in 2005 forced Copenhagen-based Carlsberg A/S (CARLA) to pay US$120 million to settle a legal dispute with a brewer he controlled, last month set off a battle over APB. Companies managed by his family have offered to buy stakes in the Singapore-based beer maker and Fraser & Neave Ltd, a conglomerate that controls 40 per cent of APB.

His bet on APB is already making Charoen’s clan richer. Charoen’s moves prompted Amsterdam-based Heineken to bid S$7.5 billion ($6 billion), or S$50 a share, for all of APB. This week, his son-in-law’s company topped that by offering Fraser & Neave S$55 a share for 7.3 per cent of APB.

“It’s a brilliant move by this Thai tycoon,” said Goh Han Peng, an analyst at DMG & Partners Securities. “I think this latest partial offer is designed to provoke a higher offer from Heineken.”
The bidding war has already raised the value of Charoen’s son-in-law’s Asia Pacific stake by about $134 million as the shares have climbed. The family’s payout will surge more if Heineken raises its bid or Fraser & Neave (FNH) sells other parts of its businesses.

Deutsche Bank analyst Gregory Lui estimates that a sale of APB at S$50 a share could provide Fraser & Neave and its shareholders “significant” one-time gains and special dividends of about S$2.71 a share. Based on a roughly 24 per cent stake in Fraser & Neave, that would bring Charoen’s Thai Beverage (THBEV) a cash windfall of about $742 million.

In his fight with Carlsberg, Charoen had initially sought as much as $2 billion in damages from the foreign brewer. Charoen wanted the payout because Carlsberg ended a joint venture with a beer business he controlled.

His current efforts to cash in on brands such as Tiger and Bintang, the top-selling brew in Indonesia, show the attraction of Southeast Asia’s growing populations and expanding economies to beer companies.

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