F&N hires Goldman to advise on Heineken's bid for beer maker

SINGAPORE: Singapore conglomerate Fraser and Neave (F&N) has hired Goldman Sachs to weigh Heineken NV's $6 billion bid for Asia Pacific Breweries (APB) as the takeover battle for the maker of Tiger Beer intensifies, sources said.
The
tussle for Southeast 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 on Friday
completed a frenetic week for F&N, whose joint venture with the
Dutch brewer has a 65 percent controlling stake in APB.
Heineken offered to buy out F&N's interest in APB after Singapore's Oversea-Chinese Banking Corp
and an affiliated group said they had received a $3 billion 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 percent to a record on Monday, was
still trading below Heineken's offer of S$50 a share because of
uncertainty over whether the deal would go through.
F&N, whose shares rose about 5 percent, said its board was considering Heineken's offer.
F&N was not immediately available to comment on Goldman's role as its financial advisor, while a spokeswoman for the bank declined to comment.
"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."
Nomura
raised its target price on F&N to S$9.16 from S$8.08 and maintained
its neutral rating. Nomura said if F&N accepts Heineken's offer, it
will reap cash proceeds of about S$5.2 billion but lose an important
contributor to its earnings.
Without APB, F&N will have a
smaller food and beverage business comprising its ASEAN soft drinks and
dairies businesses, Nomura said. But the Singapore conglomerate, which
also owns a property division, will have additional cash of S$5.2
billion, or S$3.66 per share, part of which could be paid as a special
dividend, according to Nomura.
Heineken's rivals, Thai Beverage PCL and Japan's Kirin Holdings Co Ltd
<2503.T>, are unlikely to readily let the world's third-largest
brewer take control of a beer empire stretching from Mongolia to New
Zealand, analysts said.
Kirin, which holds 14.7
percent of F&N, is also weighing its options, sources familiar with
the matter said, declining to be identified because of the sensitivity
of the matter.
"Without APB, Kirin and ThaiBev may push for a
demerger of the property business so the businesses can be valued
separately and control for the F&B and property assets settled
accordingly," Nomura said. ($1 = 1.2569 Singapore dollars)- Reuters