Heineken in talks with F&N on higher APB offer

SINGAPORE/HONG KONG: Heineken NV , the world's third-biggest brewer, is in talks with Singapore's Fraser and Neave on raising its $6 billion offer for Asia Pacific Breweries to fend off a challenge from a Thai beer baron, three sources said.

The revised offer may be conditional on F&N not accepting a partial bid from a company linked to Thai billionaire Charoen Sirivadhanabhakdi for APB, the maker of Tiger beer, one of the sources told Reuters on Friday, declining to be identified because the talks were confidential.

Heineken's offer of S$50 per share for the 58 percent of APB it does not already own is being countered by the Thai company, which made a separate bid to buy F&N's 7.3 percent direct stake in APB for S$55 a share. The Singapore drinks and property conglomerate controls around 40 percent of APB.

"It is definitely a higher price," said one of the three sources with direct knowledge of the talks.

APB and F&N requested on Friday that trading in their shares in Singapore be suspended pending an announcement. No further details were given.

"Heineken's resolve to win APB seems to be very strong," said Andrew Chow, head of research at UOB Kay Hian in Singapore. "APB has an extensive distribution network and breweries. Its Tiger brand is also strong in Asia. At S$50, it's already not that cheap, but I suppose in this kind of situation they can probably extract more."

Charoen and his companies have been raising their direct and indirect stakes in APB to block a takeover of the Singapore-based brewer. The Thais have said they want to work with APB's biggest shareholder, Heineken, to tap into the fast-growing beer markets of Southeast Asia.

Thai Beverage, which Charoen controls, recently became F&N's largest shareholder with 26.4 percent. Charoen's son-in-law offered to buy F&N's direct 7.3 percent stake in APB.

F&N's board of directors agreed to sell the firm's 40 percent interest in APB to Heineken on Aug. 3, but the deal is subject to shareholder approval.

Japanese brewer Kirin, which owns around 15 percent of F&N, has not indicated whether it is agreeable to the sale of the Singapore conglomerate's interest in APB to its Dutch rival.

"As a minority shareholder, if there's a bidding war, we'll probably sit on the sidelines and make a decision at the appropriate time," said Christopher Wong, a senior investment manager at Aberdeen Asset Management Asia, which holds stakes in both F&N and APB.

An F&N spokeswoman declined to comment. Heineken was not immediately available to comment.

Goldman Sachs is advising F&N, while Citigroup and Credit Suisse are advisers to Heineken. Morgan Stanley and HSBC are advising the Thais. - Reuters

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