Heineken pays $6.1 billion as it nets Tiger beer

TOBY STERLING

AMSTERDAM (AP) — Heineken NV splashed out €4.7 billion ($6.1 billion) to gain control over the Tiger beer brand as part of a strategy to significantly expand its operations in Asia.

Shareholders of Singapore-based conglomerate Fraser & Neave agreed Friday to sell their 39.7 percent stake in Asian Pacific Breweries, the owner of Tiger and other popular Asian brands, to Heineken for €3.2 billion. After Friday's deal, Heineken controls 95 percent of APB.

CEO Jean-Francois van Boxmeer said the company wanted "to move big and bold on the region, which is still a growth market for decades to come, for beer and premium beer."

Though Van Boxmeer conceded Heineken is paying a "full price" for APB, he said there were huge potential returns available, citing a forecast that the premium segment in China, in which Heineken and Tiger operate, will grow by 12 percent per year through 2020.

After the deal, which is being financed by debt, around 55 percent of Heineken's operating profits will come from "high growth" economies, he claimed.

Heineken also sees prospects for cross-selling Tiger beer globally, as beer drinkers have "appetite for something that is exotic, that comes from somewhere else."

Other APB-owned brands include Baron's Strong Brew, DB Bitters, ABC Extra Stout and Anchor. In Indonesia it brews Bintang, in New Zealand, Tui, and in Malaysia, "Guinness Anchor Berhad."

Heineken has owned part of APB via a joint venture with Fraser & Neave for nearly 80 years, but began working hastily to increase its stake of around 42 percent in July. Heineken had to raise its bid for Fraser & Neave's stake to ward off a rival Thai bidder, and it also bought shares on the open market and from smaller stakeholders.

SNS Securities analyst Richard Withagensaid the deal is positive for Heineken.

"Heineken's initial bid for APB was already expensive, but even with the new higher offer, we still believe the deal to be compelling for Heineken from a strategic perspective," he said.

Heineken shares rose 0.6 percent to €46.29.