Aug. 9 (Bloomberg) -- Thai billionaire Charoen Sirivadhanabhakdi has a history of making money by fighting foreign brewers. Now he’s doing it again as his company is poised to see big gains in a tussle with Heineken NV over Asia Pacific Breweries Ltd., the maker of Tiger and other beers popular across Southeast Asia.
Charoen, who in 2005 forced Carlsberg A/S to pay $120 million to settle a legal dispute with a brewer he controlled, last month set off a battle over APB. Companies managed by his family have offered to buy stakes in the Singapore-based beer maker and Fraser & Neave Ltd., a conglomerate that controls 40 percent of APB.
His bet on APB is already making Charoen’s clan richer. Charoen’s moves prompted Amsterdam-based Heineken to bid S$7.5 billion ($6 billion), or S$50 a share, for all of APB. This week, his son-in-law’s company topped that by offering Fraser & Neave S$55 a share for 7.3 percent of APB.
“It’s a brilliant move by this Thai tycoon,” said Goh Han Peng, an analyst at DMG & Partners Securities. “I think this latest partial offer is designed to provoke a higher offer from Heineken.”
The bidding war has already raised the value of Charoen’s son-in-law’s Asia Pacific stake by about $134 million as the shares have climbed. The family’s payout will surge more if Heineken raises its bid or Fraser & Neave sells other parts of its businesses.
Deutsche Bank analyst Gregory Lui estimates that a sale of APB at S$50 a share could provide Fraser & Neave and its shareholders “significant” one-time gains and special dividends of about S$2.71 a share. Based on a roughly 24 percent stake in Fraser & Neave, that would bring Charoen’s Thai Beverage a cash windfall of about $742 million.
In his fight with Copenhagen-based Carlsberg, Charoen had initially sought as much as $2 billion in damages from the foreign brewer. Charoen wanted the payout because Carlsberg ended a joint venture with a beer business he controlled.
His current efforts to cash in on brands such as Tiger and Bintang, the top-selling brew in Indonesia, show the attraction of Southeast Asia’s growing populations and expanding economies to beer companies. They are betting on drinkers such as Peter Koh, 33, who works in sales at a bank in Singapore and has been drinking Tiger since he was 18.
“Even if I go overseas I will take Tiger,” Koh said. “It tastes a bit more refreshing than the rest. I think there’s a tinge of lemon in the beer.”
Charoen put the spotlight on Tiger when his Thai Beverage PcL on July 18 agreed to buy 22 percent of Fraser & Neave from Singapore-based Oversea-Chinese Banking Corp. and partners.
Thai Bev had been mulling an investment in Fraser & Neave for more than a year before negotiations with the Singaporean bank intensified last month, according to one person with knowledge of the matter. Charoen and OCBC sealed the deal in talks at Singapore’s Intercontinental Hotel, the person said, asking not to be identified as the information is private.
Also on July 18, Kindest Place Groups, a company controlled by Charoen’s son-in-law Chotiphat Bijananda, agreed with OCBC and its partners to take an almost 9 percent stake in APB. Heineken responded two days later with its S$7.5 billion offer. Fraser & Neave’s board last week recommended the Heineken offer to shareholders.
Founded in 1931, APB brews over 40 beer brands, including Tiger, which the company says is offered in 60 countries worldwide. It also distributes Heineken in markets from Indonesia to China and is the Dutch brewer’s main foothold in Asia. APB’s profit rose almost 19 percent to S$218 million in the six months through March, according to data compiled by Bloomberg.
Charoen, 68, was born and raised in Bangkok’s Chinatown district after his parents moved from Shantau in China. His business interests extend to other industries such as property development insurance. Based on his 70 percent stake in Thai conglomerate Berli Jucker Public Co. and a 66 percent holding in Thai Beverage, he now has $5.9 billion worth of stock, according to data compiled by Bloomberg.
Thai Bev, which sells Chang -- Thailand’s No. 2 beer brand -- as well as spirits and soft drinks, got only about 3.7 percent of its 2011 revenue of 132 billion baht ($4.2 billion) from outside its home country, according to data compiled by Bloomberg. Thai Bev in 2006 sold shares in Singapore after anti-alcohol protesters blocked an offering in its home market. The company says it is now is looking to expand overseas.
Vichate Tantiwanich, a senior vice president at Thai Bev, declined to comment on negotiations over Fraser & Neave or APB.
Fraser & Neave, in addition to the brewing assets it holds through APB, has real estate and soft drink assets that could interest other buyers once the brewing operations are disposed of. Charoen may also benefit from a breakup of Fraser & Neave after the brewing operations are sold, said Jonathan Foster, director of Global Special Situations at investment firm Religare Capital Markets.
“In addition to making money, they might get to look at, and have first option at assets they might like,” Foster said. “This is probably a win-win for Thai Bev.”
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