Heineken unsettled by Thai move on Tiger Beer

Charoen Sirivadhanabhakdi speaks during a news conference at the Singapore Exchange in Singapore May 30, 2006.

SINGAPORE/HONG KONG (Reuters) - Heineken, the world's third-largest brewer, warned it would act to protect its interests in Asia, after the founder of Thailand's leading beer and spirits group bid for a stake worth $1.6 billion in its partner in the region.

The Asia Pacific region is a fast-growing one for Heineken, where it brews Tiger Beer with Singaporean partner Fraser and Neave (F&N) (FRNM.SI).

Billionaire Charoen Sirivadhanabhakdi, wants to buy a 19.2 percent stake in Heineken's Asian partner, from Overseas-Chinese Banking Corp (OCBC) (OCBC.SI) and its insurance unit, sources said.

If Sirivadhanabhakdi is successful, his entity will emerge as Fraser and Neave's (F&N) biggest shareholder, followed by Japanese brewer Kirin Holdings Co (2503.T).

Dutch Heineken expressed concern over what it called a "sudden development". F&N and Heineken jointly control Asia Pacific Breweries APBB.SI whose flagship brand is Tiger Beer.

Sirivadhanabhakdi, has also offered to buy a 7.9 percent holding in Asia Pacific Breweries, a $550 million stake that is also owned by OCBC and its insurance unit, Great Eastern Holdings (GELA.SI). The two stakes were valued at about $2.1 billion at Monday's closing price.

Heineken said on Tuesday it was actively considering its options. "We are seeking all necessary assurances and will take any appropriate action in order to safeguard our interests," the company said.

Heineken, which is diluting its reliance on tough Western Europe beer markets, earns half its profits from emerging markets. Tiger Beer is sold in more than 60 countries.

The bid could complicate relations for Heineken, which owns a 42 percent stake in APB, compared with F&N's 40 percent.

A Singapore-based analyst who did not wish to be named as he was not authorized to speak to the media, said: "It could just be a stake for the long haul. But it could cause acrimony with Heineken because they will be affected. I do not see how they (the Thai entity) can make a full bid for F&N".

Heineken's chief executive said in a newspaper interview last year that Kirin's holding in F&N had given him an "uncomfortable feeling".

Some analysts said the Thai bid could lead to a break-up of F&N because its diverse businesses are valued more individually than as a group.

F&N earned 59 percent of its 2011 revenue from its food and beverage business and 34 percent from property. It is among the bigger players in Singapore's property development market and has interests in publishing, printing and other businesses.

Analysts said Heineken might be drawn itself to launch a counterbid, take control of F&N, seize the brewing assets and sell off the rest. It has done a split-up purchase before with its joint acquisition in 2008 of Scottish & Newcastle with Carlsberg (CARLb.CO).

Gerard Rijk, beverage analyst at ING in Amsterdam, said Heineken could easily afford to do so, with a net debt/EBITDA ratio below 1.8 times.

For any buyer, F&N would bring in marquee beer brands such as Tiger Beer, Anchor and Bintang and a high market share in the fast-growing South East Asia region.

Global beer makers are busy buying up assets in developing markets despite increasing prices, helped by low interest rates.

In the latest such consolidation move, Anheuser-Busch InBev (ABI.BR), the world's biggest brewer, paid $20.1 billion to take over Mexico's Grupo Modelo.

F&N's shares ended 2.5 percent higher at a record S$8.10 on Tuesday on strong volume after OCBC said it had received a bid for its stake in F&N. APB shares surged 6.7 percent to a record high of S$37.00.

Officials with Thai Beverage, OCBC and Kirin declined to comment.

(Additional reporting by Eveline Danubrata in SINGAPORE and Philip Blenkinsop in BRUSSELS; Writing by Anshuman Daga; Editing by Matt Driskill and Elaine Hardcastle)