Spotlight back on Thai suitor after Heineken hikes Tiger brewer bid

Mon Aug 20, 2012 6:30am EDT

* Shareholder vote meeting yet to be scheduled

* Analysts believe Thai suitor will accept Heineken offer

* Heineken shares rally on Monday

By Denny Thomas and Ben Deighton

HONG KONG/AMSTERDAM, Aug 20 (Reuters) - Heineken's sweetened offer of $6.35 billion to take control of the maker of Tiger Beer throws the spotlight back onto the Thai suitor that launched the beer battle last month.

Heineken's S$53 per share offer to take control of Asia Pacific Breweries (APB) gained the approval of Singapore conglomerate Fraser & Neave's (F&N) board last week. Thai Beverage, F&N's biggest shareholder, may still challenge the safeguards that the Dutch brewer has secured to win the takeover war.

Companies linked to Thailand's second-richest man, Charoen Sirivadhanabhakdi, agreed last month to pay S$3.8 billion ($3.02 billion) to acquire stakes in F&N and its affiliate APB. Fearing it may lose control of a key beer partnership, Heineken launched a counter-bid, which it bumped up on Friday.

"The matter remains that Thai Beverage (ThaiBev) at 53 will make a nice profit on their stake so maybe that can persuade them to accept, but we will have to wait for the votes," said Robert-Jan Vos, an analyst at ABN AMRO. "I think the chances have increased that they will be able to complete."

Heineken secured commitment from the F&N board last week not to solicit, engage in talks or accept any alternative offer or proposal for its interests in APB, significantly boosting its chances of owning whole of APB.

Heineken also attached a S$55.9 million break fee on its offer and set a Dec. 15 deadline, giving the Dutch brewer the option to walk away from the deal if all conditions are not met.

The stage is now set for the casting of the crucial F&N shareholder vote, the date for which is yet to be determined.

The world's third-biggest brewer just needs 51 percent of F&N shareholders to vote in its favour to get the transaction over the line.

Japanese brewer Kirin, which indirectly owns part of APB through its 14.9 percent stake in F&N, has remained quiet during the battle, so the focus has returned to ThaiBev, and whether it accepts or resists Heineken's latest bid.

The composition of F&N's shareholder register makes it hard to predict if Heineken's upped bid is a slam dunk. Adding to the complexity is ThaiBev's stated interest and ability to buy more F&N shares and its financial muscle to hold out for an even higher offer.

ThaiBev controls 26.4 percent of F&N after buying more shares from the open market since its initial investment in F&N. Some analysts expect the maker of Chang beer to raise its stake to just short of 30 percent to avoid making general offer for whole of F&N.

Even if ThaiBev and Kirin vote against Heineken's offer, it would need the support of Eastspring Investments, the asset management arm of British insurer Prudential and M&G Investment Management Ltd, to block the deal. The two funds together own 14.9 percent of F&N, Thomson Reuters data shows.

Eastspring could not be reached for comment, while M&G declined to immediately comment.

A source close to Kirin said the Japanese brewer is expected to accept Heineken's offer. Kirin declined to comment.

OFFER SWEETENED

Heineken last Friday raised its bid by 6 percent, underscoring the Dutch brewer's keen desire to own 100 percent of APB and gain a larger slice of one of the last beer markets that is still growing rapidly.

Majority control would require Heineken to make a general offer for the whole company.

Heineken shareholders appear excited for the deal as well, as shares of the company rose 1.3 percent to 43.69 euros on Monday. Shares in APB and F&N did not trade on Monday due to a public holiday in Singapore.

APB, among Southeast Asian brewers, is the sixth-largest in terms of sales across the Asia-Pacific region, behind San Miguel Corp of the Philippines in the No.1 spot and ThaiBev in the fourth, according to Euromonitor's latest data for 2011.

Some analysts said Heineken's revised offer means the Thai group will back off.

"As Heineken's offer restricts F&N from soliciting alternative offers, we are unlikely to see further response from KPG (Kindest Place Groups)," Nomura Holdings said in a report dated Aug. 20, referring to the company owned by Charoen's son-in-law that had forced Heineken to lay a counter-bid.

If Heineken succeeds in getting control of APB, many bankers and analysts expect F&N to be split into two companies, leaving its beverage and property businesses open to outside suitors. ($1 = 1.2542 Singapore dollars) (Additional reporting by Khettiya Jittapong in BANGKOK, James Topham in TOKYO; Editing by Michael Flaherty and Ryan Woo)

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