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Heineken extends Asia Pacific Breweries offer

by Renee Cordes | Published July 27, 2012 at 9:04 AM

Heineken NV on Friday, July 27, extended its 5.1 billion Singapore dollar ($4.07 billion) offer for co-owner Fraser and Neave Ltd.'s shares in Asia Pacific Breweries Ltd. by a week at the request of its partner.

Heineken, which already owns 42% of Asia Pacific Breweries, is offering to buy Fraser and Neave's direct and indirect holdings in the Singapore-based maker of Tiger beer for S$50 a share. It plans to follow that up with a S$2.4 billion offer to minority APB shareholders at the same price, taking the total price Heineken would pay for APB's equity to S$7.5 billion.

Heineken's offer - now due to expire on Aug. 3 - was lodged two days after Thai Beverage PCL, controlled by billionaire Charoen Sirivadhanabhakdi, struck a S$2.78 billion deal for stakes in Fraser and Neave and APB held by Oversea-Chinese Banking Corp. Ltd., its Great Eastern Holdings Ltd. insurance unit and the closely held Lee Rubber Co. (Pte.) Ltd.

Amsterdam-based Heineken is also offering S$163 million for Fraser and Neave's interest in the non-APB assets held by Asia Pacific Investment (Pvt.) Ltd., a 50:50 joint venture between Heineken and the beverages-to-property conglomerate.

"Heineken made it very clear last Friday that they are willing to buy APB," said Richard Withagen, an analyst at SNS Securities NV in Amsterdam. "This could end up in a bidding war."

The bidding war could be complicated by Japan's Kirin Holdings Co. Ltd., which owns 14.7% of Fraser and Neave and is reportedly considering a bid for the group's soft drinks and dairy business.

In Friday's announcement, Heineken - the world's third-largest brewer - reiterated its case to investors but indicated it wouldn't hesitate to go hostile if needed.

"Heineken continues to believe that the offer represents compelling value for Fraser and Neave shareholders and APB's minority shareholders," the company said.

Heineken added that while it wants to reach an agreement with Fraser and Neave, if denied the opportunity to extend its offer to all APB shareholders "it will review all options available to protect its commercial interests."

Heineken also noted Friday that the S$50-per-share offer is 45% above the target's one-month volume-weighted average price through July 16, when ThaiBev made its offer public.

In a filing Friday to the Singapore Stock Exchange, Fraser and Neave said that it had not received any competing offers for its indirect and direct holdings in Asia Pacific.

"In the meantime," said the statement from Company Secretary Anthony Cheong Fook Seng, "shareholders are advised to refrain from taking any action in relation to their shares of the company which may be prejudicial to their interests, and to exercise caution when dealing in the shares of the company."

Heineken is being advised by Credit Suisse Group's David Serre and Citigroup. Inc., while Fraser and Neave has enlisted Goldman, Sachs & Co.

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Heineken extends Asia Pacific Breweries offer

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