KUALA LUMPUR: The battle for Fraser & Neave Ltd’s (F&N) beverage assets has taken another twist. While the jousting for control of F&N’s brewery unit Asia Pacific Breweries Ltd (APB) continues between Thai businessman Charoen Sirivadhanabhakdi and Dutch brewer Heineken NV, there are now reports that other parties are also eyeing the Singapore outfit’s non-beer beverage business.
According to reports, soft drinks giant Coca-Cola Co is contemplating making a bid for F&N’s non-beer beverage business, comprising Bursa Malaysia-listed Fraser & Neave Holdings Bhd (F&N Malaysia) as well as other related subsidiaries. F&N holds a direct 56.43% stake in F&N Malaysia.
None of the parties said to be involved in the deal has commented on the matter officially. When contacted, F&N Malaysia also declined to comment. However, the news pushed F&N Malaysia’s share price to an all-time intra-day high of RM20.04 yesterday before closing at RM20.
While it remains unclear at this point whether Coca-Cola has made an offer for F&N’s non-beer beverage business, the fate of APB will be decided by today.
Both F&N and APB counters have been suspended, pending the announcement by F&N on whether it accepts Heineken’s US$4.1 billion (RM12.8 billion) offer for its stake in APB. F&N holds 40% of APB, while Heineken already has 42%.
Heineken’s move to protect its interest came two weeks ago following Charoen’s acquisition of a 22% stake in F&N through Thai Beverage Plc at S$8.88 (RM22.27)per share, from Oversea-Chinese Banking Corp and its partners. Thai Beverage is owned by Charoen’s TCC group.
At the same time, Kindest Place Groups, a company owned by Charoen’s son-in-law Chotiphat Bijananda acquired 8.4% of APB at S$45 per share. The Dutch brewer saw Charoen’s move as a clear encroachment on its Asian interests, and subsequently offered S$50 per share for F&N’s 40% stake in APB.
If F&N’s board chooses to accept Heineken’s offer, it would then leave F&N Malaysia as one of the main contributors for F&N’s food and beverage segment.
Although reports have said that Coca-Cola is seriously considering F&N’s non-beer beverage business, Japan’s Kirin Holdings’ position in the entire matter still remains a wild card. Reports have also stated that Kirin, which holds 14.7% stake in F&N, was also contemplating making an offer for F&N’s non-beer beverage business.
Kirin has so far stood on the sidelines of this tussle, only saying that it would continue to monitor the situation. When the news first broke over the tussle for APB, one analyst had commented that F&N could be more valuable broken up than as a whole. Disposing its food and beverage segment, comprising beer and non-beer, would leave property as the main earnings contributor. Property already contributes 35% to profit before interest and taxation for the 2011 financial year, followed by the beer segment at 32%.
F&B in general, encompassing both the beer and non-beer operations, still remains the biggest contributor to overall group revenue with 59%, followed by property at 34%.
It should be noted that Coca-Cola is no stranger to F&N or F&N Malaysia. For years, F&N Malaysia had been the exclusive bottler for Coca-Cola, until the deal ended in Sept 2011 when the latter announced that it was setting up its own bottling facilities.
Losing the “Coke” business had left F&N Malaysia looking to shore up its drinks portfolio, banking on isotonic drink 100 Plus as well as energy drink Red Bull. “While Coca-Cola has already said that it intends to build its own plant, the company could still see value in F&N Malaysia coming from its extensive distribution network. F&N Malaysia also has its dairy business in Thailand that also has value,” said an industry analyst.
There is no question that global beverage makers continue to see value in the emerging Southeast Asian economies. Heineken’s rationale for its swift retaliation to Charoen’s entry was that it was time to look ahead to the next chapter of its Asian business.
Last year Japan’s Asahi Group Holdings Ltd bought CI Holdings Bhd’s unit Permanis Sdn Bhd, the bottler for PepsiCo Inc, for RM820 million as part of its expansion drive.
Then in May this year, Yeoh Hiap Seng (S) Pte Ltd proposed to take private Yeoh Hiap Seng (M) Bhd for RM3.60 per share, in a deal valued at some RM550 million.
This article appeared in The Edge Financial Daily on August 3, 2012.
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