Dutch beer manufacturer Heineken NV has submitted a $4.1 billion bid to purchase Singapore's Asia Pacific Breweries, one of Asia’s largest brewers, in an effort to increase its presence on the continent.
Heineken offered to pay APB’s parent company Fraser & Neave $40 a share for its entire stake in APB; Heineken and F&N have been partners in Asia since 1931.
Currently, Heineken holds a 42% stake in APB, while F&N has 40%. The remaining shares are held by Japanese brewer Kirin Holdings, which has yet to submit a bid. It holds one seat on F&N’s board and could vote against Heineken’s bid.
Heineken launched its buyout proposal in response to a $2.2 billion bid placed by Thai Beverage Co, and market analysts say they anticipate a three-way bidding war.
Heineken says: “It is time for us to look ahead to the next chapter of our Asian business, in which Singapore will continue to be our regional headquarters, and both the Heineken and Tiger brands will spearhead our portfolio in Asia.”
APB is considered a good fit as it manufacturers Anchor, Anglia, Bintang, Malta and Tiger beer brands, and has a strong presence in Indonesia, Malaysia, Singapore and Vietnam.
According to industry experts, if completed, the purchase would be the largest Asian beer acquisition outside of Japan.
Asia-Pacific One of World’s Most Lucrative Beer Markets
Heineken’s bid is part of its overall strategy to expand into emerging markets and provide long-term financial value for shareholders. If the deal is accepted, Heineken would gain access to markets in Southeast Asia as well as in China and New Zealand.
Asia is one of the world’s most lucrative beer markets, and the largest market by volume. According to Euromonitor International, Asia accounted for 25% of the world’s $616 billion in beer sales last year.
Beer manufacturers foresee sales, increasing as the middle class population rises in Asia’s developing nations.
Key Stats - Beer Industry in Asia (source: MarketLine)
- In 2010, the beer market in Asia-Pacific generated revenue of $135 billion, with a compound annual growth rate (CAGR) of 5% from 2006 to 2010.
- In 2010, the most lucrative segment of the Asia-Pacific beer market was standard lager sales, which saw revenue of $101 billion or the equivalent of 75% of total market value.
- For the five-year period 2010-2015, market performance is predicted to decelerate to a CAGR of 4%. At that time, the market should be valued at $164 billion.