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Thai Beverage targets Singapore companies

by Renee Cordes  |  Published July 18, 2012 at 12:42 PM
Chang-beer227x128.jpgThai Beverage PCL said Wednesday it is in talks to buy Oversea-Chinese Banking Corp.'s stakes in Singapore's Fraser and Neave Ltd. and Asia Pacific Breweries Ltd., worth a combined 2.85 billion Singapore dollars ($2.3 billion).

The announcement from Thailand's No. 1 brewer sets the stage for a potential bidding war with Japanese market leader Kirin Holdings Co. Ltd., which paid S$1.34 billion for 14.7% of consumer goods conglomerate Fraser and Neave two years ago, and with Heineken NV, which owns 41.9% of Asia Pacific Breweries in a joint venture whose roots date to 1931. Fraser and Neave, in turn, owns 40% of Asia Pacific Breweries.

Asia is widely seen as one of the last brewing M&A battlegrounds in an industry in which deals over the past decade have put nearly half the global beer market in the hands of the top five brewers. Belgium's Anheuser-Busch InBev SA/NV was the last to strike, agreeing June 29 to buy out its Mexican joint venture partner, Grupo Modelo SAB de CV, in a $20.6 billion deal.

Singapore-based OCBC owns 18.2% of Fraser and Neave, whose brands include Chang lager, and 7.92% of Tiger Beer maker Asia Pacific Breweries. Based on Tuesday's closing share prices, the stakes in Fraser and Neave and Asia Pacific Breweries were worth S$2.1 billion and S$757 million, respectively. Fraser and Neave shares Wednesday fell 1.7%, while Asia Pacific Breweries rose 3%. OCBC and its Great Eastern Holdings Ltd. unit on Monday had disclosed talks with an unnamed bidder.

In Wednesday's statement, ThaiBev president and CEO Thapana Sirivadhanabhakdi said: "The company is presently in discussions to explore the possibility of acquiring the shareholdings referred to in the joint announcement" of OCBC and Asia Pacific Breweries. However, he cautioned, "No definitive binding agreement has yet been entered into."

He also advised shareholders and potential investors to "exercise caution" when dealing in the company's shares.

A Heineken spokesman said Wednesday that the company had seen the statements from OCBC and ThaiBev, adding: "We are reviewing our options and will take any action in order to safeguard our interest."

ThaiBev is controlled by Thai billionaire Charoen Sirivadhanabhakdi, who has an estimated fortune of $5.5 billion, according to Forbes magazine. Charoen, the father of Thapana, has been building his stake in ThaiBev since taking the company public in Singapore in 2006.

The brewer has been seeking to diversify beyond alcohol, agreeing in September to buy Serm Suk PCL, the bottler of PepsiCo Inc. beverages in Thailand, for up to 15.42 billion baht ($486 million).
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Tags: Asia Pacific Breweries Ltd. | Fraser and Neave Ltd. | Oversea-Chinese Banking Corp. | Thai Beverage PCL

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Renee Cordes

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