Beverage bidding war bubbles up

Kindest Place’s surprise bid made things more difficult and expensive for Heineken to take over APB, one of the largest beer companies in the Asia Pacific region, with 40 beer brands including Heineken and Tiger.

Heineken already owned 42 per cent of APB prior to its current offer to buy another 40 per cent from Singapore-based F&N in a deal that would be worth as much as $6 billion.

Heineken’s takeover bid was prompted by the Thai billionaire’s earlier move to buy a huge 22-per-cent stake in F&N from Singapore’s Overseas Chinese Banking Corp and other entities.

The Dutch beer giant was worried its foothold in the fast-growing Asia-Pacific market would be jeopardised by Charoen’s move, since Charoen, majority owner of Thai Beverage plc and a wide range of business interests in Thailand, already owns 23 per cent of F&N.

F&N, which has huge interests in beer, soft drinks and other non-alcoholic beverages, as well as property in the region, was originally the key partner of Heineken in APB, which is currently 40-per-cent-owned by F&N. Heineken’s crucial interest in APB looks insecure once Charoen expressed his intention to buy the additional 23 per cent stake in F&N.

In this ongoing multi-million-dollar money game, the Thai billionaire is already winning as much as $800-900 million in windfall capital gains from his large shareholdings in both F&N and APB, as both stocks, listed on the Singapore exchange, jumped in recent weeks.

Besides this highly-lucrative return, Charoen has also aimed at diversifying his business empire into the 10-country Asean Economic Community, which becomes a single market and production base of 600 million consumers in 2015.

APB, with breweries in Singapore, Thailand, China, Vietnam and other countries, is seen as a crown jewel in the diversification bid to challenge players like Heineken, which is the world’s No 3 beer brand after In-Bev Group of Belgium and Miller Group.

With a relatively young and large population, the AEC and other Asian markets for alcoholic beverages will grow at a higher rate in coming decades than European and North American markets.

Even if Charoen does not get APB in the end, as Heineken will likely top the bid for the 40 per cent of shares it does not already own, the Thai billionaire will make huge profits on capital gains by triggering the stock-price bidding war with the Dutch brewer.

If Heineken gets complete control of APB, this will likely lead to the break-up of F&N’s other businesses, namely non-alcoholic beverages, soft drinks and dairy products, as well as its relatively large property portfolio.

The break-up would then open other opportunities for the Thai billionaire, who also has sizeable interests in the Thai beverage industry as well as in property development.

Charoen recently took over the majority stake in Serm Suk, the bottler of Pepsi and related soft drinks, as well as another company, which produces Oishi green tea and other beverages.

In the property sector, Charoen is one of Thailand’s biggest landlords, with a sprawling portfolio of commercial, office, hotel and other properties in Bangkok and major tourist destinations.