Kirin, F&N line up advisers for takeover battle for prized Singapore brewery

SINGAPORE: Japan's Kirin Holdings and Singapore's Fraser and Neave (F&N) have hired investment banks to advise them through the takeover battle for a prized Asian beer maker, adding to signs that a bidding war will intensify in the coming days.

Kirin had tapped Deutsche Bank to help defend its turf in a two-way fight for Asia Pacific Breweries (APB), sources familiar with the matter said yesterday, showing for the first time that the Japanese company would not sit quietly while its rivals moved in to wrest control of the maker of Tiger beer.

Last week, companies linked to a Thai billionaire agreed to pay S$3.8bil (US$3.02bil) to acquire stakes in F&N and its affiliate APB from Singapore bank, Oversea-Chinese Banking Corp (OCBC). That forced APB shareholder Heineken NV to launch a US$6bil counterbid for the beer maker.

Kirin, which indirectly owns part of APB through its stake in F&N, could try to block an attempt for control of the Singapore conglomerate, sources said.

“All options are on the table,” said one of the sources with direct knowledge of the deal. “As a major shareholder of F&N they have a lot more say.”

It was unclear whether Kirin wants to launch a counterbid for F&N, which analysts have mentioned as a possible breakup candidate. The Singapore conglomerate earned 59% of its revenue last year from its food and beverage business and 34% from property.

But Kirin, with its near 15% stake in F&N, would want to have a say if the battle for F&N led to a breakup, said the sources.

Kirin and Deutsche Bank declined to comment.

“I'm not convinced that Kirin will go ahead and take such a large amount of debt to get into something that is fairly complicated, given the property assets involved at F&N,” said Nigel Muston, an analyst at CLSA Asia-Pacific Markets in Tokyo. “And that their own Japanese brand beer and soft drinks may not get the sort of exposure they want in South-East Asia if they can get it.”

F&N had hired Goldman Sachs to weigh Heineken's bid for APB, sources said on Monday. The Dutch brewer's bid for APB will expire on Friday.

The tussle for South-East Asia's biggest beer maker comes amid a wave of industry consolidation and expanding beer sales in emerging markets, although APB's ownership structure makes this among the most complicated assets to buy.

Heineken's proposal last Friday completed a frenetic week for F&N, whose joint venture with the Dutch brewer has a 65% controlling stake in APB.

Heineken offered to buy out F&N's interest in APB after OCBC and an affiliated group received a US$3bil bid for their stakes in F&N and APB from companies linked to Thai billionaire and founder of Thai Beverage Pcl, Charoen Sirivadhanabhakdi.

APB, whose shares surged as much as 18% to a record on Monday, were up 0.3% yesterday. They were still trading below Heineken's offer of S$50 a share. F&N rose 1% yesterday.

“There's still some uncertainty as it is not clear how F&N will react to the offer,” said Goh Han Peng, an analyst at DMG & Partners Securities.

“If the F&N shareholders do not accept the offer from Heineken, they may come up with a hostile offer for APB, meaning they will go to the minority shareholders. The second way is to go directly to F&N and mount a takeover because shares in APB are very illiquid,” Goh added. - Reuters