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Notso'EasyTiger':HeinekenfacespossibleAPB
biddingwar
ByBenBouckley,08Aug2012
Relatedtopics:Manufacturers,EmergingMarkets,Heineken
HeinekenfacesthepotentialprospectofabiddingwartoseizecontrolofAsiaPacificBreweries(APB),aftera
companylinkedtorivalThaiBevtrumpedtheDutchbrewer'sS$50persharebidinashockmoveforasmaller
stakeyesterday.
HeinekenthismorningnotedFraserandNeave's(F&N's)announcementthatthelatterhadreceivedanunsolicitedand
conditionalofferfromKindestPlaceGroupsLimited(KPG)forF&N'sdirect7.3%stakeinTigerBeerbrandownerAPB,in
aS$55pershareofferworthuptoS$1bn($803,000).
KPG'smovehasbeenhailedasashrewdonebyfinancialanalystscoveringHeineken,oneofwhomtold
BeverageDaily.com,however,thatitwasdifficulttoworkoutthepreciseThaimotives,orwhethertheyhadthecashto
buyF&N'swholestakeinAPBatalaterdate.
"IthinkthiswillgetHeinekentopaymore,ortheywillbesomesortofconcessionbidorsweetenerplacedonthetable.
ThemostplausiblescenarionowisthatHeinekenoverpays(andthey'vealreadyaroundofferedx18EBITDA)orjust
acceptThaiBevasapartnerandmoveon,"theanalystsaid.
"IknowHeineken'sresponsetothishasbeen'wellwe'reofferingmore'[intotal,seebelow]butit'sS$55versusS$50,so
thiswillforceHeineken'shandagain.I'dsayF&Nwilllookforsomethingmore."
Payingthroughthenose?
Heinekenwascaughtbetweena"rockandahardplace",theanalystadded:"APBisagoodasset,butyou'realready
payingmorethanABInBevpaidforGrupoModelo.Ifyoulookatpricesoverthelastdecade,probablyaroundx12
EBITDAiswhatyoushouldbepaying.Nowwe'reinthehighteens."
OwnedbythesoninlawofThailand'ssecondrichestman,ChareonSirivadhanabhakdi,KPGcurrentlyholdsan8.6%
stakeinAPBSirivadhanabhakihimselfischairmanandprincipleshareholderofThaiBev,whichownsa24.1%stakein
F&N.
KPG'smovefollowsanannouncementfromF&N'sboardlastFridaythatithadagreedtorecommendHeineken'sJuly20
offerforF&N'sentire(directandindirect)39.7%effectivestakeinAPB,andits50%shareonnonAPBassetsinAsia
PacificInvestmentforS$5.3bn.
HeinekeninsistedtodaythatKPG'sofferwhichwilllapseonAugust16didnotcomparetoitsown,sinceitwasonly
worthS$1bntoF&N,andsaid:"HeinekencontinuestobelievethattheHeinekenofferrepresentscompellingvaluefor
F&N'sandAPB'sshareholders.
"HeinekencontinuesitsdiscussionswithF&NinrelationtotheHeinekenofferacceptedbytheboardofF&Non3
August2012,"itadded.
TheDutchbrewernotedthatitsofferwasworthuptoS$7.7bn,giventhatcompletionthereofwouldtriggeramandatory
generaloffer(MGO)onHeineken'spartforthebalanceofAPB'sshares,addingS$2.4bntothevalueofanydeal.
'Troubleanddrag'ofWesternEurope
StressingHeineken'skeennesstosealthedealforAPB,theanalystnotedtheDutchfirm'sgeographicvulnerability,with
thefirmfacingwhathedescribedas"troubleanddrag"ofcirca.40%salesexposureinWesternEurope,andaracefor
attractiveemergingmarketassets.
"ThisdealwouldtakeAsiafrombeingcirca.6%ofgroup[sales]to1415%,thatshouldboosttheunderlyinggrowthrate
ofthegroup,"hesaid.
"They[Heineken]needthat,becauseIcan'tseewesternEuropegettingbetteranytimesoon,andthelevelofcost
savingswillslowfromwhatwe'veseenoverthelastdecadeorso."
Heinekenfacedstiffcompetitionelsewhere,headded:"ABInBevhavejustmovedintoMexico,soitwillprobablyget
morecompetitivethere.NigeriahasalsobeenagreatmarketforHeineken.
"NowSABMilleraremovingintowhatwas,effectively,acosyjauntfor20yearsbetweenDiageoandHeineken."
http://www.beveragedaily.com/content/view/print/661498

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