UPDATE 4-Heineken wins Tiger battle; focus shifts to F&N fight

Fri Sep 28, 2012 7:21am EDT

* F&N gets 54.3 pct vote for capital reduction plan, below required 75 pct

* F&N says will consider other ways to give funds to shareholders

* APB sale to Heineken had become formality after agreement by Thais

* F&N shares down 0.2 percent, below the Thai offer

* Heineken shares up 1.2 pct

By Eveline Danubrata and Philip Blenkinsop

SINGAPORE/BRUSSELS, Sept 28 (Reuters) - Heineken NV won full control of the maker of Tiger beer in a S$7.9 billion ($6.4 billion) deal on Friday, ending a two-month battle aimed at strengthening the Dutch brewer's position in fast-growing Asian beer markets.

Shareholders of Singapore conglomerate Fraser and Neave Ltd (F&N) backed the sale of their stake in Asia Pacific Breweries (APB) to the world's third largest brewer.

Their vote ended the battle between Heineken and companies linked to Thai billionaire Charoen Sirivadhanabhakdi for control of APB, which operates 30 breweries across 14 countries from Mongolia to New Zealand.

The spotlight is now on a $7.2 billion bid by Charoen for the rest of F&N, through Thai Beverage PCL and TCC Assets Ltd. The Thais control 30.7 percent of F&N, which will remain a large player in property and soft drinks.

Heineken, which already owned nearly 56 percent of APB through an 81-year-old venture with F&N, had sought full control of the brewer to ward off the advances of Charoen, whose family's companies became F&N and APB shareholders in July.

The Dutch brewer said the average financing costs for its purchase were expected to be less than 3 percent a year. It gave no details of possible cost savings and said the rationale for the deal was more the promise of revenue growth.

Heineken Chief Executive Jean-Francois van Boxmeer said the deal would boost the company's exposure to two of the fastest-growing regions for beer in the world - Southeast Asia and the Pacific Islands, and China.

Brewing research group Plato Logic forecast the Southeast Asia and Pacific Islands market would grow by an average 4.8 percent per year to 2020 - faster than Africa, Latin America and Eastern Europe.

Heineken will focus on higher margin premium brands such as Heineken, Tiger and Anchor, for which growth was forecast at 8 percent per year in Southeast Asia and 12 percent in China, and push Tiger into other markets, including Europe.

Heineken shares were up 1.2 percent at 1110 GMT, making them the second-strongest in the STOXX European food and beverage index.

THAI BATTLE CONTINUES FOR F&N

While the Thais gave their approval for the APB sale, they voted down a proposal by F&N's board to pay out S$4 billion ($3.3 billion) to shareholders via a capital reduction.

The motion required 75 percent support but got only 54 percent. Excluding the Thai votes, 91 percent of shareholders voted in favour, according to an F&N spokeswoman.

"ThaiBev/TCC could use the capital to fund acquisitions to grow F&N's business, or to make distributions which may be more amenable to ThaiBev/TCC," Deutsche Bank analyst Gregory Lui said in a client note.

By keeping the S$4 billion within F&N, the Thais would also make it more expensive for a third party to launch a counterbid for the conglomerate, other analysts and bankers said.

The Thai group's S$8.88 per share offer for the rest of F&N expires on Oct. 29. F&N shares were down 0.1 percent at that level after a trading halt was lifted.

Japan's Kirin Holdings Co Ltd, F&N's second-biggest shareholder, was considering options including a sale of its 15 percent stake, but was still holding out for a potential higher price, banking sources said.

The Japanese brewer said previously it was interested in F&N's food and non-alcoholic drinks business.

In a meeting attended by more than 500 shareholders, activist Mano Sabnani described the Thai offer as "lacklustre".

"My view is the breakup value of F&N is about S$10 and I think most analysts would agree with me," Sabnani said to the applause by some shareholders at the meeting in an air-conditioned tent set up near F&N's office.

F&N officials told shareholders, including two units of British insurer Prudential PLC, that the conglomerate would seek to expand its other businesses after the sale of APB.

F&N is the leader in the soft drinks markets in Singapore and Malaysia, with a 24.5 percent and 26.9 percent market share, respectively, according to Euromonitor. But F&N's reach in the rest of the region is weak and its Asia-Pacific market share is only 0.3 percent.

F&N's property portfolio, worth more than S$8 billion, has also attracted the interest of Blackstone Group LP and global property companies, sources have told Reuters, while the beverage business could appeal to potential suitors such as Coca-Cola Co.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article