Dutch brewer Heineken NV (AMS:HEIA) said it had agreed a final, higher bid of SGD5.6bn (USD4.5bn/EUR3.6bn) for the direct and indirect stakes in Singapore-based peer Asia Pacific Breweries Ltd (SGX:A46), or APB, held by Fraser & Neave Ltd (SGX:FNN), or F&N.
The statement came to confirm an earlier report by Reuters, which cited knowledgeable sources, that the company was in talks to sweeten its bid in an effort to prevent a Thai rival, Kindest Place Groups Ltd (KPG), from gaining control of the maker of Tiger beer.
KGN, which is owned by Thai billionaire Charoen Sirivadhanabhakdi’s son-in-law, made an unsolicited and conditional bid of SGD55.00 for F&N’s direct 7.3% stake in APB earlier this month. Charoen owns Thai Beverage Pcl (SGX:Y92), which is F&N’s biggest shareholder with some 24%.
Heineken raised its offer to SGD53.00 per share for F&N’s 39.7% stake in APB, up from the previous SGD50.00 apiece, and proposed the same amount of SGD163m for F&N’s interest in the non-APB assets controlled by Asia Pacific Investment Private Ltd, APIPL, their 50/50 joint venture. The target’s owner has committed to irrevocably recommend the offer and hold a general meeting to put it to the vote, Heineken said.
The final offer represents a premium of 54% over the one-month volume weighted average price per APB share and a price/earnings multiple of 35.1 times for the last twelve months ending 30 June 2012, Heineken said. It described it as providing “compelling” value for F&N and APB shareholders.
Upon completion of the deal, Heineken will own an 81.6% stake in APB it and will immediately start a mandatory general offer of SGD2.5bn for the remaining APB shares. It will fund the transaction with available cash of some EUR2bn, a revolving credit facility and a new bridge commitment arranged by Credit Suisse Group AG (NYSE:CS) and Citigroup Inc (NYSE:C). The Dutch brewer asserted that it was committed to reducing its net debt to EBITDA ratio to below 2.5 times within 24 months following the completion of the deal.
The transaction is subject to gaining regulatory clearance, apart from F&N’s shareholder approval, and is expected to close in the fourth quarter of 2012, but no later than 15 December 2012. Credit Suisse and Citigroup serve as financial advisers to Heineken.