Singapore: Heineken on Friday secured a Singapore group’s approval for its takeover of the Tiger Beer brand, boosting the Dutch giant’s share of the Asian market after a high-stakes tussle with a Thai rival.
Shareholders of Fraser and Neave (F&N), the parent of Asia Pacific Breweries (APB), approved Heineken’s offer of Sg$5.6 billion ($4.6 billion) for its 40 percent stake in APB, which has breweries in 14 markets including China.
Amsterdam-based Heineken is seeking to boost sales in fast-growing Asian economies as demand falls in mature western markets. It already held 42 percent of APB, which also makes Bintang beer, the top brand in Indonesia.
“I declare the resolution carried,” F&N chairman Lee Hsien Yang said after 98.73 percent of shareholders voted for the deal, which is expected to be formally completed by late November.
Shareholder Simon Zee, 57, said the result was expected and he supported the takeover because it was “value for money” for people like him.
“I think Heineken will probably keep Tiger Beer, because Tiger Beer is an international brand name,” he said, referring to some Singaporeans’ fears that one of the city-state’s best-known brands might fade away in the long term.
Heineken, which has been an F&N partner for 81 years, has publicly vowed to grow the Tiger Beer brand and APB’s other businesses after the takeover.
One analyst said Heineken paid a steep price to fend off a challenge from a Thai faction in F&N, led by beverage billionaire Charoen Sirivadhanabhakdi, who eventually gave his approval to the sale after Heineken raised its offer.
“Heineken are paying a pretty penny for APB, at about 35 times its current earnings, which is very high,” Justin Harper, an analyst at IG Markets Singapore, told AFP.
“This shows how much it values APB and the brands it controls. Along with Tiger and Bintang, APB has an impressive 50 percent market share of beer sales in Indonesia, Malaysia and Singapore.”
Before Friday’s F&N shareholders’ meeting in Singapore, Heineken bought an additional 8.6 percent in APB held by Thailand’s Kindest Place Groups, also linked to Charoen, for $961 million.
Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight, said the approval “represents an important strategic success” for Heineken.
“With the outlook for consumer spending in its European home market looking grim for years ahead due to the EU crisis, Heineken is looking to Asia to drive its future revenue growth. China, India and (Southeast Asia) are expected to be the world’s fastest growing markets for beverages,” he told AFP.
Heineken first announced its takeover bid for APB in July, when it offered to pay Sg$5.1 billion for F&N’s stake, or Sg$50 a share.
However, it was forced to raise the offer to Sg$53 a share or $5.6 billion after companies linked to Charoen appeared to be mounting a rival bid.
On September 19, the Thai firms agreed to back Heineken’s takeover, defusing a potential clash at Friday’s meeting.
Charoen has since turned his eye to F&N’s other operations by tabling an offer totalling Sg$8.7 billion ($7.1 billion) for the 70 percent of the group’s shares that the Thai faction does not yet own.
APB reported in August that its revenues for the third quarter to June rose almost 10 percent to Sg$781.33 million ($637.95 million) from a year ago.
Beer consumption in nine of the 10 Southeast Asian countries totalled 6.84 billion litres in 2011, up more than six percent from 2010, with Vietnam, Thailand and the Philippines leading the market, according to data from research firm Euromonitor.
