Will Heineken manage to control Tiger brewer Asia Pacific Breweries?

Will Heineken manage to control Tiger brewer Asia Pacific Breweries?

For us journalists, it's the gift that keeps on giving. For the management of Heineken, it must seem like a recurring headache. The protracted battle over its JV Asia Pacific Breweries is developing more sub-plots than a series of Dallas. 

Heineken must have thought it had finally put the matter to bed last Friday when Fraser & Neave approved its SGD50 per share offer to take full control of APB.

But, as analysts Nomura noted this week, it is "not the end of the story".

First, there's the matter of a firm with family links to ThaiBev, Kindest Place Groups (KPG), this week bidding to up its stake in APB. This prompted Heineken to issue a borderline peutulant statement, saying KPG's bid was "not comparable" to its own. That may be a fair point, as KPG is trying to acquire F&N's direct 7.3% share in APB to go with the 8.6% direct stake it acquired from Singapore bank OCDC last month. The Dutch brewer, however, is hoping to bag F&N's near-40% share in the Tiger brewer -  a difference of a cool SGD6.7bn. That's no small beer.

KPG's involvement may seem minimal, but it effectively means ThaiBev's owner, billionaire Charoen Sirivadhanabhakdi, will get more of a say over how much control Heineken gets of the precious Tiger. Nomura suggests ThaiBev might try to "push up the ante" for the Heinken, in order to a get a "higher overall offer for APB". 

But, it added: "We think that Heineken would prefer not to have ThaiBev as an ongoing minority within APB, which could continue to restrict how that company is managed and we would expect the company to raise its APB bid from the current SGD50 to at least match Thai Bev at SGD55." 

However, Nomura suggests that Heineken's offer only requires a 50% majority approval from F&N shareholders, implying that "ThaiBev cannot block the Heineken bid".

Aside from this, there remains talk of Kirin, which has a 15% stake in F&N, gatecrashing the party. According to Nomura this could "still lead to a possible break-up of APB".

Warming to the theme, the analysts drilled in to this possible scenario. "Kirin already has major positions in New Zealand and Indonesia, so would not be allowed to take those assets for regulatory reasons," it suggested. Turning to ThaiBev, it said: "APB has a small operation in Thailand, which might be attractive to Thai Bev." 

While, for APB's Dutch owner, Nomura said: "We believe that Heineken’s key interest would be in the growth markets of Indochina." 

Nomura concluded with this gem of an understatement: "However, a break-up would be complicated." 

If a break-up was the final outcome, everyone would need a lie down. Not least just-drinks' managing editor, Olly Wehring.