| SINGAPORE/HONG KONG
SINGAPORE/HONG KONG Companies linked to a Thai billionaire have agreed to pay S$3.8 billion ($3.02 billion) to buy stakes in a conglomerate and affiliated brewery from Singapore's No. 2 bank, OCBC, putting pressure on Dutch brewer Heineken (HEIN.AS) to make a counterbid.
Thai Beverage pcl (TBEV.SI), controlled by tycoon Charoen Sirivadhanabhakdi, said in a statement that it has agreed to buy a 22 percent stake in conglomerate Fraser and Neave (F&N) (FRNM.SI) from Oversea-Chinese Banking Group (OCBC.SI), its insurance unit and the Lee family, which is the banking group's biggest shareholder.
Fraser and Neave owns 40 percent of Asia Pacific Breweries APBB.SI, one of the region's largest brewers and maker of the popular Tiger beer. Heineken owns 42 percent of APB, a stake it highly valued thanks to fast growing beer sales across Asia Pacific.
Heineken's beer volumes in the region rose 6.2 percent last year, compared with just 0.2 percent in western Europe and 1.0 percent in the Americas.
The Thai Beverage offer may also prompt Japan's Kirin Holdings (2503.T) to make a move, as it owns a 14.7 percent stake in F&N.
"We believe a three-way tussle with Kirin and Heineken ... could emerge," CIMB analyst Donald Chua said in a research note early on Wednesday, after Thai Beverage said only that it was in talks over the F&N stakes. "Central to this theme is APB, a company we believe all three parties would want to control."
Heineken has said it considering its options after this 'sudden' development. On Wednesday, it said it was committed to APB and was seeking clarification.
"Heineken continues to believe that APB is a good business that will continue to grow and deliver significant value for shareholders," it said.
It added that Thai Bev was a competitor in Thailand and other Asian markets.
After disclosing details of the offer late on Wednesday, the Thai group said the deal gave it exposure to high growth Southeast Asian markets, as F&N is the largest beverage company in Singapore and Malaysia and has presence in over 30 countries.
"The proposed investment is a logical step to fulfilling the company's vision to be a leading global beverage producer and distributor," ThaiBev said, with little mention of F&N's non-beverage activities such as property and printing.
As part of the deal, a company controlled by Charoen's son-in-law has agreed to buy an 8.5 percent stake in Asia Pacific Breweries. The combined deal for all the stakes is worth around $3 billion.
The transaction has put the focus on Charoen's son, however, as the deal is seen as a chance for him to make his mark with a major 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.
OCBC Group said it would make a post-tax gain of about S$1.15 billion from the deal. The buyers are paying S$8.88 a share for F&N shares and S$45 a share for APB, a premium of 11.6 percent and 18 percent, respectively.
While Kirin has remained quiet since word of the Thai bid emerged on Tuesday, Charoen's surprise offer has jolted Heineken, prompting it to express concern over what it called a "sudden development.
"We are seeking all necessary assurances and will take any appropriate action in order to safeguard our interests," Heineken said in a statement.
Charoen is Thailand's second-richest man, with a net worth of $5.5 billion, according to Forbes. He took ThaiBev, Thailand's largest brewer and distiller, public in Singapore in 2006. He has bet heavily on real estate and his privately held TCC Land owns Bangkok tech mall Pantip Plaza. Charoen also owns hotel chains in Manhattan and Australia, and residential and commercial buildings in Singapore and Thailand.
Heineken, which is diluting its reliance on tough Western Europe beer markets, now earns half its profits from emerging markets. Tiger Beer is sold in more than 60 countries.
Goh Han Peng, an analyst at OSK DMG, said in a note that the Thai Beverage offer comes amid a wave of industry consolidation. Anheuser-Busch InBev (ABI.BR), the world's biggest brewer, recently paid $20.1 billion to take over Mexico's Grupo Modelo.
APB is the largest brewery in the Asia-Pacific, with operations in 14 countries including Indonesia and Vietnam.
"We believe Heineken will actively explore its options to safeguard its interest in APB, including possible counter-offers for the stakes in F&N and APB," Goh said in the note.
Heineken has signaled an interest in making a move before, with its chief executive saying 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.
Heineken has done a split-up purchase before with its joint acquisition in 2008 of Scottish & Newcastle with Carlsberg (CARLb.CO), although this would be a far more complicated deal.
For any buyer, ownership of the OCBC stakes would bring in marquee beer brands such as Tiger Beer, Anchor and Bintang and a high market share in the fast-growing Southeast Asia region. ($1 = 1.2648 Singapore dollars) (Additional reporting by Philip Blenkinsop in Brussels; editing by Raju Gopalakrishnan, Michael Flaherty and Bernard Orr)