Heineken In Talks With F&N To Up APB Bid

08/17/2012| 12:46am US/Eastern

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SINGAPORE--Dutch brewer Heineken NV (>> Heineken N.V.) is in talks with Singapore conglomerate Fraser & Neave Ltd. (F99.SG) about an increased offer for Asia Pacific Breweries Ltd. (A46.SG), two people familiar with the situation said Friday.

Fraser & Neave and Heineken share a 50-50 joint venture that owns 64.8% of APB. Fraser & Neave has a 7.3% direct stake in APB and Heineken 9.5%.

Heineken last month made a US$6 billion offer for the whole of APB at 50 Singapore dollars a share. But last week, Kindest Place Group--owned by the son-in-law of Thailand billionaire Charoen Sirivadhanabhakdi--came in with a S$55 a share offer for Fraser & Neave's 7.3% direct stake. Kindest Place already owns 8.6% of APB.

The latest move by Heineken is aimed at securing Fraser & Neave's support against rival offers for APB, the maker of Tiger beer.

Earlier this month, the board of Fraser & Neave recommended its shareholders accept Heineken's offer for the whole of APB. But the higher offer from Kindest Place complicates the deal.

A Heineken spokesman said that the company is in "continuous talks" with its partners on the matter, but declined to comment further.

By taking full control of APB, Heineken will have a greater share of one of Asia's most profitable beer makers at a time when it is facing lackluster sales in its home base in Europe. APB's Tiger and Bintang APB beer brands have nearly 50% of the beer market in Indonesia, Malaysia and Singapore, according to data provider Euromonitor.

Asia Pacific Breweries has 30 breweries and 40 brands spanning 14 Asian countries. It also brews Heineken beer for some markets in the region.

Still, even if Fraser & Neave's board accepts an increased offer by Heineken, shareholders of the Singapore conglomerate would still have to vote on the deal. That means Heineken will have to win over Mr Charoen's Thai Beverage PCL. (Y92.SG), the largest shareholder in Fraser & Neave with a 26.4% stake, and Japan's Kirin Holdings Co. Ltd. (>> Kirin Holdings Co), which has 15%, in buying out APB.

Both ThaiBev, which sells Chang beer, Thailand's top beer, and Kirin compete with Heineken in the Southeast Asian region.

Shares in Fraser & Neave and APB were suspended from trade on the Singapore Exchange Friday.

Write to P.R. Venkat at venkat.pr@dowjones.com

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