Heinekenis offering S$50 a share for the 58 per cent of APB it does not
already own but it has not revealed details of the financing for the deal or
indicated what sort of cost savings it might extract. That is because
Heineken has been rushed into action by other developmentsthis week in APB’s
Byzantine corporate structure that might make a deal more difficult further
down the line.
Heineken has good reason to push to the front as there is a lot to like about
APB. Revenues have almost doubled in the past five years, while net income
is up from S$130m to S$340m (US$270m) in the same period. It has big
positions in Vietnam and Indonesia, both growing rapidly as newly enriched
consumers develop a taste not just for beer but for premium brands such as
APB’s Tiger.
The Asia-Pacific contributed 60 per cent of incremental global beer volumes in
the past 10 years, estimates Bernstein, although price differences make that
figure smaller in value terms. Heineken trails some of its big rivals – last
year it generated 1 per cent of its revenues in the Asia-Pacific region
against 11 per cent for Carlsberg, 8 per cent for SABMiller and 6 per cent
for AB InBev.
Heineken is certainly proposing a full price for APB’s growth. Its offer puts
APB’s enterprise value at 19 times its historical earnings before interest,
tax, depreciation and amortisation. By contrast, Heineken itself trades at
11 times. It might even be pushed into increasing its offer. Rivals Kirin
and ThaiBev are shareholders in other parts of the APB corporate structure
and, depending on the attitude of other APB investors, they might fancy a
tilt at the brewer themselves.
Despite the early rush to the bar, it is going to be a long session.
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