It doesn’t take beer goggles to see the appeal of Asia Pacific Breweries, A46.SG 0.00% the brewer at the center of a three-way tussle between some of the world’s biggest beer makers.<\/p>\n
APB has a leading market share in emerging markets like Malaysia and Indonesia where beer consumption is expected to follow rising incomes. Over the 10 years to last September, revenue grew 11.4% a year and margins expanded from 15% to 22%, CLSA says. The company, which has a market cap of US$10.8 billion, has a footprint in 14 countries across Asia\u2014the biggest beer-drinking region in the world by volume, according to Euromonitor.<\/p>\n
The company was put into play by Thai Beverage, Y92.SG +7.35% Thailand’s biggest beer maker, which said this week it agreed to buy a 22% stake in Singapore’s Fraser & Neave. A 50\/50 joint venture between F&N and Heineken has a 64% share in APB. Meanwhile, a company owned by the son-in-law of Thai Bev’s owner also agreed to buy an 8.6% stake in APB directly.<\/p>\n
The shuffling left Heineken uncomfortable. Its stake in APB\u2014via the joint venture\u2014is a key foothold in the growing Asian market. The Dutch brewer responded to Thai Bev’s moves by launching a 5.1 billion Singapore dollar ($4.07 billion) offer to buy F&N out of the joint venture altogether. That would leave F&N with some property assets and a few other beverage lines.<\/p>\n
Complicated? To make matters more so, the wild card is now Japanese brewer Kirin, which took a 14.7% stake in F&N in 2010 for about $1.4 billion. Kirin’s looking to expand beyond its domestic market, where beer sales are slipping. The company has spent more than \u00a51 trillion ($12.7 billion) on overseas acquisitions over the past five years. Its position in F&N should help Kirin bulk up in Southeast Asia. But with Thai Bev now moving in, Kirin “may need to make a bold decision as to whether to sell F&N shares or make a counter bid,” says UBS UBSN.VX -4.39% in a note.<\/p>\n
Heineken’s S$50-a-share offer for APB implies an enterprise value for the company of about 15 times next year’s earnings before interest, taxes and amortization, higher than the recent average for similar brewery deals of about 12.5 times, CLSA’s Rob Bruce says. With motivated bidders, the price could yet go higher. APB’s appeal is intoxicating. But competing bidders must be careful not to overpay.<\/p>\n","protected":false},"excerpt":{"rendered":"
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