The Dutch brewer sought to acquire Singapore-listed conglomerate Fraser and Neave's direct and indirect stakes in APB, one of the biggest Asia-Pacific breweries, putting a S$50-per-share bid on the table. That tops the S$45-a-share offer proposed by companies linked to tycoon Charoen Sirivadhanabhakdi for part of those holdings.
Asia is a key revenue driver for Heineken, having posted an 8.4 increase in first-quarter beer volumes, nearly double the growth in the Americas and well above a drop of almost 2 percent in its home market of Western Europe.
"People were expecting something from either Heineken or Kirin, but how fast Heineken moved is the surprising thing," said Andrew Chow, head of research at UOB-Kay Hian in Singapore.
Fraser and Neave (F&N) owns 40 percent of APB, maker of the popular Tiger beer. Heineken already owns 42 percent of the beer maker, a stake that it treasures given Asia's fast-growing beer market.
Rival brewer Japan's Kirin Holdings also owns a 14.7 percent stake in F&N.
Credit Suisse and Citigroup are advising Heineken on the bid.
The battle for APB comes amid a wave of industry consolidation. Anheuser-Busch InBev, the world's largest brewer, recently paid $20.1 billion to take over Mexico's Grupo Modelo.
The action in Asia began on Monday when Singapore's second-biggest bank, OCBC, disclosed that it had received a bid for its stakes in F&N and APB, an ownership interest it held since 1948. OCBC did not identify the suitor.
OCBC's sale of its non-banking assets has long been suspected, even though the bank has a heavy cash cushion. The question of how real the bid was lingered until late on Wednesday night when companies linked to Charoen announced a S$3.8 billion ($3.03 billion) offer.
Thai Beverage pcl, controlled by Charoen, agreed to buy OCBC and its affiliated group's 22 percent stake in F&N. As part of that deal, a company controlled by Charoen's son-in-law agreed to purchase an 8.5 percent share in APB. The total offer was around $3 billion.
The Thai family offered S$8.88 a share for F&N shares and S$45 a share for APB.
Thai Bev shares jump 13 pct after Heineken's bid for APB
Shares of Singapore-listed Thai Beverage rose Friday as much as 13 percent and extended early gains after Heineken NV trumped a bid for Asia Pacific Breweries (APB).
Thai Beverage shares rose as much as 13.2 percent to a record S$0.385 on volume of more than 62 million shares, 7.7 times the average full-day volume traded over the past 30 days.
The stock was the top traded by volume. Heineken's higher bid has stoked market talk that the offer by companies linked to Thai billionaire Charoen Sirivadhanabhakdi, whose family controls Thai Bev, could be scuppered.
Moody's Investors Service had put Thai Beverage's Baa2 issuer rating under review for downgrade as the proposed deal is expected to be funded by debt.
Heineken launched a S$50 per share offer for F&N's direct and indirect stakes in APB, topping the S$45-a-share offer proposed by companies linked to Thai tycoon Charoen Sirivadhanabhakdi for part of those holdings.
Heineken quickly tipped its hand that it would be forced to respond to the Thai threat to its Asian partnership.
The ThaiBev bid put pressure on Heineken to protect its highly valued investment in APB, which operates in 14 Asian countries including fast-growing Indonesia.
Heineken earns half of its profits from emerging markets, with Tiger Beer sold in more than 60 countries. Speculation built that Heineken would launch a counter offer, which it delivered in a statement on Friday.
"We believe the latest offer by Heineken is a preemptive move to recent shareholding changes at F&N and APB," Goh Han Peng, an analyst at DMG & Partners Securities, wrote in a research note.
Heineken's counter-bid includes a S$163 million offer for F&N's interest in the non-APB assets held by Asia Pacific Investment Private Ltd, a 50-50 joint venture between Heineken and F&N.
"We really value our partnership with F&N which goes back over 80 years, but due to changes in the F&N and APB shareholding, the fabric of the partnership has changed," Heineken Chairman and CEO Jean-Francois van Boxmeer said.
It was time for Heineken to look ahead to the "next chapter of our Asian business," he said.
Heineken has so far failed to gain the scale that rivals AB InBev and SABMiller have built in China, the world's largest beer market by volume. Ownership of the OCBC stakes 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.
APB sells its Tiger brand along with Heineken's familiar green label brew across the region from Mongolia to New Zealand. APB gets 45 percent of its pretax earnings on sales in ThaiBev's own backyard – Thailand, Vietnam, Cambodia and Laos. In Thailand, ThaiBev's Chang, or "elephant" beer, is already a big player.
The focus now turns on whether the Thai family will raise its offer, and whether Kirin will make a move in what one analyst called a "three-way" tussle for APB.
"There have been no changes in our strategy for the Southeast Asia non-alcohol beverage market, which we pursue mostly through Fraser and Neave, but we refrain from commenting on the current developments," said Kirin spokeswoman Nahoko Abe.
Vichet Tantivanich, senior vice president of ThaiBev told Reuters on Friday that while it was the right of Heineken to make an offer, ThaiBev has already signed an agreement.
"We have already signed a contract to buy the stake from the sellers," he said. "This should be completed by October as we informed the Singapore Stock Exchange."
Companies that receive a higher offer for a pending acquisition are obligated in most cases to consider the better offer should one materialize. Sources familiar with the matter say OCBC will have to formally entertain the Heineken bid, and has the right to choose the offer over the Thai group.
OCBC was not immediately available to comment.
Charoen is Thailand's second-richest man, with a net worth of $5.5 billion, according to Forbes. He took ThaiBev 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.
($1 = 1.2541 Singapore dollars)