NETHERLANDS/SINGAPORE: Heineken's "final" Asia Pacific Breweries offer will be "knock-out blow" - analyst
Heineken's "final" offer for APB could be a "knock-out blow", an analyst suggests
Heineken's increased offer to Fraser & Neave (F&N) for its total stake in Asia Pacific Breweries (APB) should be a "knock-out blow" in the battle for the Tiger brewer, according to an analyst.
The Dutch brewer said on Friday (17 August) that it has made a "final" offer to F&N of SGD53 per share for its indirect and direct stake in APB, for SGD5.4bn. F&N's board has agreed to the deal, which will now be subject to a shareholder vote.
In a note today (20 August), analysts Bernstein Research said: "We believe that this probably represents a knock-out blow." They highlighted that Heineken's offer can be seen as SGD50 per share for the indirect stake and SGD66.40 for the direct stake. On this basis, Heineken's rivals for APB, ThaiBev, cannot afford to bid for F&N's entire stake, Bernstein said.
The Dutch brewer's biggest hurdle will be approval by a "simple majority" of F&N shareholders, the analysts said, noting that ThaiBev now has a 26.2% stake in the conglomerate. But it added: "If ThaiBev wants to block the deal, the stance of Kirin (with a 15% stake in F&N) will be critical, and and we believe that Kirin will reluctantly agree to take the cash and pursue a separate side deal for F&N's non-beer beverage assets."
Bernstein said strategically it approves of the deal. "Although, Heineken has had to pay a very high price, the deal economics could still be attractive, depending on level of synergies and growth of APB," it added.
The analysts admitted the transaction "looks pricey" compared to other emerging markets deals and it is even "slightly more expensive" than Anheuser-Busch's bid for Grupo Modelo on an inremental basis. But the note added: "As is the case with Modelo, Heineken could access 100% of incremental economic benefit for 58% of the equity."
Heineken is set to report its first-half results on Wednesday (23 August).
Heineken has a "low appetite" for China's mainstream beer sector and will continue to concentrate on the premium end of the market, the head of the Dutch brewer has said....
- Six key trends for alcoholic drinks in 2016
- Carlsberg's Q4 & full-year results - Preview
- Aus wine industry pays price for past failures
- What's in store for Super Bowl 50 - Focus
- Key trends for beer in 2016 - Focus
- William Grant & Sons restructures US team
- Diageo completes wine category exit in US
- Beam Suntory targets Kenya with Edrington/FIX
- Diageo's Oban Little Bay single malt Scotch - NPD
- Diageo nears wine exit with Acacia sale to Peju
- Global travel retail insights - market forecasts, product innovation and consumer trends
- What Next for Beer and Brewers Following the MegaBrew Deal?
- Global Beer Trends 2015 : Global Beer Trends and Long-term Forecasts
- Global Whiskey Market 2016-2020
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research