Beverage groups look for bigger share of the Asia-Pacific market
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Singapore's Fraser and Neave Group (F&N), a major food and beverage conglomerate in the Asia-Pacific region, has become a new battleground for Thai and multinational corporations vying for a significant share of the fast-growing Asean and related markets.
The battle started when Thailand’s Thai Beverages plc of tycoon Charoen Siriwattanapakdi made a recent bid to buy more F&N shares from Singa-porean shareholders Overseas Chinese Banking Corp and other entities.
Thai Bev, producer of Chang Beer in Thailand, earlier agreed to buy a 22 per cent stake in F&N from the Singa-porean shareholders. The Thai conglomerate already owns 2.1 per cent of F&N, while Kirin Holding of Japan also has a 14.7 per cent stake in F&N.
In a related development, Heineken of the Netherlands, the worId’s third-largest brewer, launched a huge US$6 billion bid to take over Singapore’s Asia-Pacific Brewery (APB) shortly after Thai Bev had agreed to buy the 22 per cent stake in F&N.
In fact, F&N and APB, which produces Heineken, Tiger and many other beer brands for regional markets, are inter-related, as F&N owns 40 per cent of APB, while Chotipat Preechanont, a son-in-law of Charoen, has another 8.5 per cent share in APB.
Heineken, which already owns 42 per cent of APB, was prompted by Charoen’s move for more shares in F&N to launch the takeover bid for complete control of APB.
While the price of $6 billion is lucrative for potential sellers like F&N and Thai Bev, an easy deal is unlikely as the Thai conglomerate has set its sight on expanding into other Asean and regional markets via its links with the bigger operators in Singapore.
In another related development, Coca-Cola, the world’s largest soft-drink maker, is also exploring a bid for the beverage business of F&N, in addition to the bidders from Thailand and Japan.
For tycoon Charoen, stakes in F&N, which has had numerous long-established brands in Thai and other regional markets for decades, are strategically important for his multi-billion-dollar business expire to tap into new business opportunities in the upcoming Asean Economic Community, due to become effective in 2015.
Charoen also wants to further diversify his interests in non-alcoholic beverages and food businesses. Previously he took over Thailand’s Berli Jucker plc, producer of snacks and other packaged food products, as well as Oishi, one of Thailand’s biggest green tea brands.
For F&N, one of its well-known brands in the Thai market is Bear milk. F&N started its dairy product business in the region more than 50 years ago following the launch of its soft drink business years earlier.
At present, the conglomerate enjoys market-leading positions in beer, diary products and soft drink businesses in the region, with combined assets estimated to be worth around Singapore $14 billion.
In the beer business alone, it has 24 breweries in 14 countries, including Singapore, Thailand, China and Indonesia.
Such a vast regional network for both alcoholic and non-alcoholic beverages means that global players like Heineken of the Netherlands and Coca-Cola of the US cannot afford to ignore the latest developments triggered by Thai regional players such as Thai Bev.
Coca-Cola is considering a bid for a bigger share of the soft-drink markets in Singapore and Malaysia if it had control of F&N’s soft-drink business.
For Thai Bev, the latest offensive underlines its ambitious regional and (potentially) global business strategy.
