Battle for Singapore brewer shows rise of ASEAN market

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 Sg$55 ($44.34) for an additional 7.3 percent stake in Asia Pacific Breweries (APB), the makers of Tiger Beer.

This was 10 percent higher than the Sg$50 per share offered by Heineken, which already owns 42 percent of APB, for the 40 percent 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 Sg$7.7 billion for a full takeover of APB, including Sg$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 percent of F&N. The company that made the unsolicited Sg$1.03 billion bid for APB shares, Kindest Place, is owned by a son-in-law of the tycoon and already has 8.6 percent 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 Sg$773.42 million in its second quarter ending March 31, up 15 percent 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 percent from 2010, with Vietnam, Thailand and the Philippines leading the market, data from research firm Euromonitor showed.

"With ASEAN GDP forecast to rise from $2.3 trillion in 2012 to $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.

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Holy Week in Mt Banahaw: Mysticism meets Catholicism VERA Files - The Inbox

    Text and photos by Patricia Isabel Gloria, VERA Files Dolores, Quezon—Around this time each year, hundreds of devotees flock to Barangay Sta. Lucia in Dolores, Quezon on the slopes of Mount Banahaw to celebrate Holy Week. Here, mysticism meets Catholicism, … Continue reading → …

  • Simbang lakad for Lolo Uweng VERA Files - The Inbox
    Simbang lakad for Lolo Uweng

    By April Anne Benjamin, VERA Files San Pedro, Laguna--For 14 Maundy Thursdays now, Inding Amoranto has prayed the rosary while walking the eight-kilometer distance from her house to the Shrine of Jesus in the Holy Sepulcher in the village of … Continue reading → …

  • Batangas women bear ‘the cross’ to save loved ones VERA Files - The Inbox
    Batangas women bear ‘the cross’ to save loved ones

    Text and photos by Jane Dasal, VERA Files Nasugbu, Batangas—At the break of dawn on Good Friday, Celilia Zafra donned a black dress and shrouded her face with a black cloth. Then she walked to a place called “putol na … Continue reading → …

POLL
Loading...
Poll Choice Options