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Heineken gulps Tiger after takeover approved

Heineken gulps Tiger after takeover approved

Sunday, September 30, 2012, 16:31 GMT+7

Heineken on Friday secured a Singapore group's approval for its takeover of the Tiger Beer brand, boosting the Dutch giant's share of the Asian market after a high-stakes tussle with a Thai rival.

Shareholders of Fraser and Neave (F&N), the parent of Asia Pacific Breweries (APB), approved Heineken's offer of Sg$5.6 billion (US$4.6 billion) for its 40 percent stake in APB, which has breweries in 14 markets including China.

Amsterdam-based Heineken is seeking to boost sales in fast-growing Asian economies as demand falls in mature markets like Europe, where a prolonged financial crisis is dampening consumer spending.

Before the takeover, it already held 42 percent of APB, which also makes Bintang beer, the top brand in Indonesia.

"I declare the resolution carried," F&N chairman Lee Hsien Yang said after 98.73 percent of shareholders voted for the deal, expected to be formally completed by November.

Shareholder Simon Zee, 57, said the result was expected and he supported the takeover because it was "value for money" for people like him.

Heineken, which has been an F&N partner for 81 years, vowed Friday to grow the Tiger Beer brand, dispelling Singaporeans' fears that one of the city-state's most famous products will lose out in the long term.

One analyst said Heineken paid a steep price to fend off a challenge from a Thai faction in F&N, led by beverage billionaire Charoen Sirivadhanabhakdi, who eventually gave his approval to the sale after Heineken raised its offer.

"Heineken are paying a pretty penny for APB, at about 35 times its current earnings, which is very high," Justin Harper, an analyst at IG Markets Singapore, told AFP.

"This shows how much it values APB and the brands it controls. Along with Tiger and Bintang, APB has an impressive 50 percent market share of beer sales in Indonesia, Malaysia and Singapore."

Heineken chief executive Jean-François van Boxmeer said in a telephone press conference that APB was "worth every last dollar we paid" because of the opportunities it presents.

"It will give us direct access to two of the world's fastest-growing regions for beer. It is Southeast Asia and the Pacific Islands and, on the other hand, China," he said.

He said Asia was financially "the weakest spot of the company" because Heineken's business in the region was not well-consolidated.

With the APB takeover, Heineken will now generate 62 percent of beer volume and 54 percent of earnings before interest and taxes from high-growth or emerging markets, he added.

Before Friday's meeting in Singapore, Heineken bought an additional 8.6 percent in APB held by Thailand's Kindest Place Groups, also linked to Charoen, for $961 million.

Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight, said the vote "represents an important strategic success" for Heineken.

Heineken first announced its takeover bid for APB in July, when it offered to pay Sg$5.1 billion for F&N's stake, or Sg$50 a share.

However, it was forced to raise the offer to Sg$53 a share or Sg$5.6 billion after companies linked to Charoen appeared to be mounting a rival bid.

On September 19, the Thai firms agreed to back Heineken's takeover.

Charoen has since turned his eye to F&N's other operations by tabling an offer totalling Sg$8.7 billion for the 70 percent of the group the Thai faction does not yet own.

APB reported in August that its revenues for the third quarter to June rose almost 10 percent to Sg$781.33 million from a year ago.

Beer consumption in nine of the 10 Southeast Asian countries totalled 6.84 billion litres in 2011, up more than six percent from 2010, with Vietnam, Thailand and the Philippines leading the market, according to data from research firm Euromonitor.



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