Heineken will pay SGD5.6bn (US$4.57bn) for Asia Pacific Breweries

Heineken's Asia Pacific Breweries buyout was a “must-do deal” that will bring the Dutch brewer's exposure to emerging markets in line with its rivals, an analyst has said.

On Friday, Fraser & Neave shareholders voted in favour of Heineken's proposed takeover of their Asia Pacific Breweries (APB) joint venture, removing the final obstacle to the deal. Heineken will pay SGD5.6bn (US$4.57bn) for APB in a bid to shore up its presence in the fast-growing Asia market.

The move will pay for for itself over the next five years as Heineken's profits in Asia triple, driven by growth for its namesake beer brand, Nomura said in a client note issued today (1 October). Asia is a critical driver of growth for brand Heinenken, creating about 57% of the group's overall growth last year, Nomura said.

However, Nomura also warned that poor performance in Spain, which accounts for nearly half of Heineken's Western Europe profits, will damage the brewer's global margins.

“While trading would appear robust (in Spain) with beer a beneficiary of consumer tradedown given its relative affordability, we have some concerns on the macro outlook for this important contributor to Western European profits,” the note said.