Comment - Wehring's Way: Heineken, Fraser & Neave and Asia Pacific Breweries

There will be a lot of relieved beers being downed in Amsterdam tonight. And, while the folk at Heineken will be keen to hedge their bar spend, they'll still want to celebrate today's news.

After being made to wait a week, Heineken finally got the green light from its friends at Fraser & Neave to make a move for the latter's stake in the Asia Pacific Breweries JV. At a cost of US$4.09bn, F&N's holding isn't cheap for Heineken, but the brewer didn't have much of a choice.

After ThaiBev moved to up its stake in F&N to 24.1% late last month, and the son-in-law of ThaiBev's owner bought 3.4% of APB itself, Heineken knew that the writing was on the wall for the JV. Within a matter of days, it pitched an offer to F&N to end their alliance of 80 years.

On the date of the deadline for Heineken's offer, F&N asked for another week to do the maths. I don't know what the phrase 'squeaky-bum time' translates to in Dutch, but I imagine the executive team will have had their fingers crossed throughout this week.

As I said, the agreed price isn't cheap: At 21x enterprise value to EBITDA, the transaction is nearer the higher end for M&A activity (Remy Cointreau's 24x EV/EBITDA purchase of Bruichladdich last month prompted many gasps), but the alternative for Heineken doesn't bear thinking about. The beer markets of China and South-East Asia are some of the main battlegrounds at the moment. To have to worry about who owns how much of APB would have been an unwelcome distraction, at best.

Whatever. I'm looking forward to the transaction going through, if only to nail down the ownership structure of APB. I've ended up cross-eyed more times than I care to remember in recent years as I've tried to explain the set-up.

Between them, Heineken and F&N own Asia Pacific Investment Pte Ltd, which holds about 65% of APB. Independently, Heineken owns about 9.5% of APB, while F&N has about 7.3% of APB.

How are your eyes?