For Thai billionaire, Singapore deal fits quest for beer empire

BANGKOK Wed Jul 18, 2012 1:30pm EDT

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BANGKOK (Reuters) - For rags-to-riches Thai magnate Charoen Sirivadhanabhakdi, Wednesday's $3 billion deal for large stakes in two Singapore firms is just the next step in furthering a beer and property empire that stretches from Southeast Asia to the United States.

The son of a Bangkok street vendor, Charoen is Thailand's second-richest man. His TCC Group controls, among other companies, Thai Beverage Pcl (TBEV.SI) and privately held TCC Land, the owner of shopping malls and hotels including the Hotel Plaza Athenee in New York.

In his latest deal, companies linked to Chareon bought 22 percent of Singapore drinks and property group Fraser and Neave (F&N) (FRNM.SI) and 8.5 percent of associated company Asia Pacific Breweries Ltd APBB.SI from Singapore's Oversea-Chinese Banking Corp (OCBC.SI), its insurance unit and the Lee family that controls the bank.

The purchases fit the pattern of expanding Chareon's drinks business and may also be a chance for his son, who now heads Thai Beverage, to cut his international teeth with a big deal.

Thapana Sirivadhanabhakdi, the third of the billionaire' s five children, was named president and chief executive of Thailand's top beer and spirits group in 2008. A Thai Beverage statement on Wednesday, confirming its bid for F&N and Asia Pacific Breweries, was signed by him.

"The son is now taking a more pro-active role," said one person who has worked with the company.

"He is lot more subdued than his father. He is very focused on the beverage business. And this move is driven by him, though ultimately the final decisions are still made by the father. He hasn't done many deals so this is his first foray."

Beyond drinks, F&N may well be a property play for Charoen, who already has substantial investments in Singapore's booming real estate market.

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.

In 2007, the Straits Times newspaper reported Charoen bought 47 of the 48 units in a luxury Singapore condominium a day before a private preview sale. He would have bought the whole thing, it said, if local laws did not prevent a foreigner from owning all units in a development.

In May, Charoen told a Thai newspaper he was looking to set up new plants in Vietnam and aiming to export more beer and non-alcoholic drinks in Southeast Asia.

Thai Beverage bought nearly 65 percent of Serm Suk Pcl (SSC.BK), the local bottler of PepsiCo (PEP.N), in October to expand its soft drinks business. In 2008, it took over Thai green tea and sushi maker Oishi Group OISH.BK for $214 million.

Charoen's now successful bid to become F&N's biggest shareholder has riled Heineken (HEIN.AS), the world's third-largest brewer, as an encroachment on its turf.

For the Dutch brewer, Asia is a fast-growing market for its own brand and it is F&N's joint venture partner in Asia Pacific Breweries, which makes Tiger beer, which is sold in more than 60 countries.

But Charoen, ranked by Forbes as the 184th richest person in the world with an estimated worth of $5.5 billion, is no stranger to a challenge.

FAMILY BUSINESS

Starting in the trading business, he and his family expanded aggressively in the liquor, sugar milling, banking and insurance fields during the 1980s and early 1990s.

Charoen entered the Thai beer market in 1995 by setting up a joint venture with Danish brewer Carlsberg to produce Chang (Elephant) brand. He later formed Beer Thai Co to manage marketing and distribution for Chang.

Asia's financial crisis of 1997/98, which led to the closure of financial institutions owned by his family, forced him to leave Thailand and stay overseas for a while.

His fortunes changed after the company intensified a battle for Chang's market share in 1999 by cutting its wholesale prices and gained ground on its arch-rival Singha Corporation, which had been selling Thailand's best-known beer Singha (Lion) since 1933.

Beer Thai was later restructured and became part of Thai Beverage before listing in Singapore in 2006.

Thai Beverage said on Wednesday it would spend 2.5 billion baht ($79 million) to set up four distribution centers as part of its push into other Southeast Asian markets.

As patriarch, Charoen has kept the business in the family in other ways. He is chairman of venerable Thai trading firm Berli Jucker (BJC.BK) but son-in-law Aswin Techajaroenvikul leads it as it embarks on major expansion plans in the region.

Charoen has also tried to venture beyond beverages and real estate into sport.

In 2004, he expressed interest in buying a stake in English soccer giants and five-time European champions Liverpool FC, with then Thai Prime Minister Thaksin Shinawatra as a potential partner in a 25 percent share.

The agreement fell through but Charoen stayed close to English soccer by clinching a $2.75 million deal to advertise Chang beer on the shirts of Everton, Liverpool's biggest rivals.

(Writing by John O'Callaghan; Additional reporting by Martin Petty in Bangkok and Denny Thomas in Hong Kong; Editing by Michael Flaherty and Raju Gopalakrishnan)

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