Carlsberg A/S, the Danish brewer of Carlsberg, Tetley and Baltika beer, agreed to pay US$120mil to a former Asian partner controlled by a Thai billionaire to divide their assets and settle a legal dispute.
The Valby, Denmark-based beer maker will spend US$80mil on buying 50% of Brewery Invest Pte Ltd and 49% of Carlsberg Brewery Hong Kong from Chang Beverages Pte Ltd. Thai liquor tycoon Charoen Sirivadhanabhakdi controls Chang.
Carlsberg, the world’s sixth largest brewer, agreed to form a partnership with Chang in 2000 to help increase its size in Asia, where beer sales are rising faster than in Europe. It removed executives representing Charoen from the board of Carlsberg Asia in 2003 after the venture failed to develop as planned.
“We were not happy with the value of the assets that Chang wanted to put into the joint venture with Carlsberg Asia,” chief executive Nils Smedegaard Andersen said yesterday on a conference call with analysts. “You make mistakes sometimes and you have to correct them.”
Chang, located in Singapore, said last year it would seek as much as US$2bil in damages because Carlsberg ended the venture. As a result of the settlement, both companies will withdraw all claims in arbitrations in London and Bangkok.
Carlsberg will book a one-time cost of US$40mil in 2005 to reflect the fair value of shares the company bought in 2002 of Hite Brewery Co, South Korea’s biggest beer maker, and for its stake in Lao Brewery. The maker of Beer Lao in Thailand’s neighbour Laos is half-owned by the Lao government, and 25% each by Carlsberg and the Charoen’s group.
Shares in the Danish company fell by 0.5 krone to 349.5 kroner at 11:15am in Copenhagen. The stock has risen 26% this year, making it the best performing European brewer in the 14-member Bloomberg Europe Beverages Index, which has gained 2.9%.
Through its purchase of 50% of Brewery Invest from Chang, Carlsberg will increase its Hite Brewery stake to 24.9% from 22.3%. Carlsberg is the biggest overseas shareholder in Hite, which has a 58% share of the South Korean beer market.
Carlsberg expanded in Malaysia, Vietnam and China in the first half of this year and is seeking more acquisitions in those countries as slower economic growth and smoking bans in pubs curbs beer consumption in Europe.
The company’s beer volumes surged 40% in Asia in the second quarter, compared with a 6% decline in Western Europe.
Chang’s Charoen, 61, owns Thai Beverages Co, Thailand’s biggest brewer, and is the country’s richest man, according to Forbes. He also sponsors English Premiership soccer team Everton, whose blue jersey bears the Chang beer logo.
The billionaire’s plan to sell shares in Thai Beverages, the maker of Chang beer, was blocked for a third time earlier this month amid protests by Buddhist monks. The monks and other protesters argued that a share sale would promote alcoholism in a country where more than 90% of the 65 million people are Buddhist.
Chang agreed, as part of the settlement with Carlsberg, to acquire from the Danish company 50% of Carlsberg Thai Co Ltd, which will be renamed, and 49% of Sukhothai Marketing Co Ltd in Thailand.
– Bloomberg
