Thailand’s TCC Said to Bid for OCBC’s Beverage Stakes

Thai Beverage Pcl (THBEV), Thailand’s biggest beer maker, said it’s in talks to buy Oversea-Chinese Banking Corp.’s S$2.85 billion ($2.3 billion) stakes in Fraser & Neave Ltd. (FNN) and Asia Pacific Breweries.

OCBC and its Great Eastern Holdings Ltd. (EH) unit are in talks with a bidder for their stakes, according to a stock exchange filing in Singapore July 16. Thai Beverage released the statement on the Singapore exchange following OCBC’s statement and reports of its connection in the transaction, it said.

Brewers including Asahi Group Holdings Ltd. (2502) and Kirin Holdings Co. have said they’re targeting takeovers in Southeast Asia, where young populations and growing economies are spurring beer sales. The population of Indonesia, the Philippines, Vietnam, Thailand and Malaysia will grow to more than 564 million by 2017 from 519 million in 2011, according to International Monetary Fund estimates compiled by Bloomberg.

“If you look at beer makers’ profitability, the more share they have, the more margin they get,” said Masashi Mori, an analyst at Deutsche Bank AG in Tokyo. “So both internally and externally, the size expansion is the tried and true tactic for beer makers.”

Thai Beverage is also Thailand’s largest whiskey producer. Shares of Fraser & Neave, Singapore’s biggest beverage maker, and Asia Pacific Breweries (APB) climbed to an all-time high yesterday after OCBC’s announcement.

“The company is presently in discussions to explore the possibility of acquiring the shareholders referred to in the joint announcement” by OCBC and Great Eastern, Thapana Sirivadhanabhakdi, Thai Beverage’s chief executive officer, said in the statement today. “No definitive binding agreement has yet been entered into.”

Heineken’s Stake

The stake in Fraser & Neave was worth S$2.1 billion at yesterday’s closing price in Singapore, while the Asia Pacific Breweries holding was valued at S$757 million. OCBC, Singapore’s second-biggest bank, and Great Eastern hold 18.2 percent of Fraser & Neave and 7.92 percent of Asia Pacific Breweries, according to their filing.

Thai Beverage is controlled by TCC Group, controlled by Thai billionaire Charoen Sirivadhanabhakdi, who also owns companies in industries ranging from insurance to property development.

Charoen wasn’t available to comment because he is traveling, according to a person who answered the phone at his office in Bangkok yesterday and declined to be identified. Koh Ching Ching, a spokeswoman for OCBC, also declined to comment yesterday.

Kirin, Heineken

Kirin, Japan’s largest brewer by market value, bought 14.7 percent of Fraser & Neave two years ago for S$1.34 billion, paying S$6.50 each per share. The stock rose 2.5 percent yesterday to close at S$8.10.

Heineken NV (HEIA), the world’s third-largest brewer, owns a 42 percent stake in Asia Pacific Breweries, the maker of Tiger beer. Fraser & Neave owns 40 percent. The brewer’s shares jumped 6.7 percent to close at S$37 yesterday.

Heineken said yesterday in a statement that it has noted the announcement on Fraser & Neave and Asia Pacific Breweries and is “actively considering” its options. The company didn’t say whether it plans to make an offer for Asia Pacific Breweries. Kirin (2503) spokesman Kan Yamamoto declined to comment.

Charoen was born and raised in Bangkok’s Chinatown district after his parents moved from Shantau in China, according to TCC’s website.

He started a trading business that supplied distilleries, and became a distiller after being awarded concessions to produce liquor in Thailand. Charoen bid for the rights to operate distilleries under the Sang Som Group during the liberalization of the nation’s liquor industry, and later expanded into beer, alcohol, sugar, and packaging businesses, according to the company.

Thai Beverage sold shares in Singapore in 2006 after anti- alcohol protesters blocked an offering in its home market. The company offered to buy Serm Suk Pcl (SSC), the bottler of PepsiCo Inc. (PEP) beverages in the Southeast Asian nation, for as much as 15.4 billion baht ($488 million) last September, saying the purchase will allow it to expand its “non-alcoholic product portfolio.”

To contact the reporters on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net; Elffie Chew in Kuala Lumpur at echew16@bloomberg.net; Joyce Koh in Singapore at jkoh38@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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