UPDATE 2-Heineken agrees deal for Tiger beer maker - sources

Fri Aug 3, 2012 7:30am EDT

* Heineken's sweetened APB offer is accepted by F&N - sources

* Deal gives Heineken control of fast-growing Asian brewer

* Coke showing interest in F&N's soft-drinks - sources

* Thai billionaire, Japan's Kirin in F&N fray

By Eveline Danubrata and David Jones

SINGAPORE/LONDON, Aug 3 (Reuters) - Heineken won control on Friday of the Asian brewing group which makes Tiger beer when Singapore's Fraser and Neave (F&N) agreed to sell its stake in the firm for over $4 billion, sources with knowledge of the situation said.

Heineken raised its bid to secure the deal over the prized Asia Pacific Breweries (APB) which will lift the Dutch group's Asian profits and could break apart F&N, a drinks and property group.

"The deal has been agreed by Heineken and F&N's management, and the agreement will now go for approval by the F&N board and then be announced officially," said one of the sources.

Heineken already owns 42 percent of APB, which runs 24 Asian breweries, and taking F&N's 40 percent stake will help the Amsterdam company to defend its turf against Thailand's second-richest man.

It had given F&N a Friday deadline to agree a sale, and the sources said the deal had been agreed in principle at a price slightly higher than Heineken's initial offer of S$50 an APB share. F&N's board would rubber stamp the sale, they added.

Heineken was unavailable for immediate comment, but the sources said an official announcement is being prepared for release later on Friday.

Heineken shares were up 0.5 percent at 44.67 euros by 1030 GMT, while APB and F&N shares were suspended on Thursday and Friday pending a deal.

VITAL DEAL

By winning APB, Heineken gets full ownership of Tiger, Bintang, Anchor and other brands of beer plus two dozen breweries in 14 countries including Singapore, Malaysia, Indonesia, Vietnam, Thailand and Cambodia. Around 30 percent of APB's volumes are for the Heineken beer brand.

The deal is vital for Heineken in the fast-growing Asian market. For the world's third-largest brewer, control of APB is set to raise the proportion of profits it gets from Asia to 15 percent from 6 percent, analysts said, boosting the growth rate of the whole group.

Sources said Coca-Cola is keeping a keen eye on F&N's other lines - which include the popular soft-drink 100PLUS, fruit juices, mineral water and dairy products - in the event they are hived off from the Singapore group's property assets.

That could pit Coca-Cola against two sizeable Asian brewers, Thai Beverage and Japan's Kirin Holdings, which have their own interests to protect as F&N shareholders.

Shares in F&N and APB were suspended after sources told Reuters that F&N's board, whose chairman Lee Hsien Yang is the younger son of Singapore's elder statesman Lee Kuan Yew, wanted a better offer, fuelling speculation that F&N was haggling with Heineken over the price.

Heineken began brewing Tiger with F&N in the 1930s but that long partnership hit the rocks after Thai Beverage and other companies linked to Thai billionaire Charoen Sirivadhanabhakdi bought stakes in F&N and APB for $3 billion last month.

The investment by Charoen, who is seeking to expand his own beer business in Asia, pushed Heineken into a general offer for APB. Heineken also offered to buyout minority shareholders in APB, pushing the deal to well above $6 billion.

F&N shares have jumped 31.5 percent this year to close at S$8.15 on Wednesday but have come off a record S$8.49. APB shares, which last traded at S$49.50, have surged 71.9 percent since the start of the year.