Heineken, the world's third-largest brewer, warned it would act to protect its interests in Asia, after the founder of Thailand's leading beer and spirits group bid for a stake worth $1.6 billion in its partner in the region.
The Asia Pacific region is a fast-growing one for Heineken, where it brews Tiger Beer with Singaporean partner Fraser and Neave (F&N).
Thai Beverage pcl, controlled by billionaire Charoen Sirivadhanabhakdi, confirmed on Wednesday that it was in talks to buy an 18.2% stake in Heineken's Asian partner from Oversea-Chinese Banking Corp (OCBC) and its insurance unit.
If Charoen is successful, his entity will emerge as Fraser and Neave's (F&N) biggest shareholder, followed by Japanese brewer Kirin Holdings Co. On Wednesday, Kirin declined to comment on ThaiBev's action.
Charoen's surprise move jolted Heineken, forcing it to express concern over what it called a sudden development. F&N and Heineken jointly control Asia Pacific Breweries whose flagship brand is Tiger Beer.
"It's a pretty aggressive move from the Thai company," a Singapore-based investment banker who advises consumer companies said. "Financing is not an issue for the family, but the end game is not clear."
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Charoen has also offered to buy a 7.9% holding in Asia Pacific Breweries, a $598 million stake that is also owned by OCBC and its insurance unit, Great Eastern Holdings. The two stakes were valued at $2.3 billion at Tuesday's closing price.
Charoen is Thailand's third-richest man, with a net worth of $4.8 billion, according to Forbes. He took ThaiBev, Thailand's largest brewer and distiller, public in Singapore in 2006. He has bet heavily on real estate and his privately held TCC Land owns Bangkok tech mall Pantip Plaza. Charoen also owns hotel chains in Manhattan and Australia, and residential and commercial buildings in Singapore and Thailand.
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Heineken said on Tuesday it was considering its options. "We are seeking all necessary assurances and will take any appropriate action in order to safeguard our interests," the company said.
Heineken, which is diluting its reliance on tough Western Europe beer markets, earns half its profits from emerging markets. Tiger Beer is sold in more than 60 countries.
The bid could complicate relations for Heineken, which owns a 42% stake in APB, compared with F&N's 40%.
A Singapore-based analyst who did not wish to be named as he was not authorised to speak to the media, said: "It could just be a stake for the long haul. But it could cause acrimony with Heineken because they will be affected. I do not see how they (the Thai entity) can make a full bid for F&N".
Heineken's chief executive said in a newspaper interview last year that Kirin's holding in F&N had given him an "uncomfortable feeling".
Some analysts said the Thai bid could lead to a break-up of F&N because its diverse businesses are valued more individually than as a group.
F&N earned 59% of its 2011 revenue from its food and beverage business and 34% from property. It is among the bigger players in Singapore's property development market and has interests in publishing, printing and other businesses.
Analysts said Heineken might be drawn itself to launch a counter bid, take control of F&N, seize the brewing assets and sell off the rest. It has done a split-up purchase before with its joint acquisition in 2008 of Scottish & Newcastle with Carlsberg.
Gerard Rijk, beverage analyst at ING in Amsterdam, said Heineken could easily afford to do so, with a net debt/EBITDA ratio below 1.8 times.
For any buyer, F&N would bring in marquee beer brands such as Tiger Beer, Anchor and Bintang and a high market share in the fast-growing Southeast Asia region.
Global beer makers are busy buying up assets in developing markets despite increasing prices, helped by low interest rates.
In the latest such consolidation move, Anheuser-Busch InBev, the world's biggest brewer, paid $20.1 billion to take over Mexico's Grupo Modelo.
F&N's shares ended 2.5% higher at a record S$8.10 on Tuesday on strong volume after OCBC said it had received a bid for its stake in F&N. APB shares surged 6.7% to a record high of S$37.00.
Officials with Thai Beverage and OCBC declined to comment.