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Heineken Takes a Keg Stand in Beer Wars With $4.1B Tiger Bid (Update 1)

Updated to reflect additional analyst comments and industry data

NEW YORK ( TheStreet) -- Heineken is the newest global beer giant to enter the M&A market, amid a high stakes land grab for brewing assets in fast-growing emerging markets as drinkers in North America and Western Europe cut back on the suds.

On Friday, Heineken offered to buy the remaining shares of Singapore-based Asia Pacific Brewers, the maker of Tiger Beer, in a move to fend off a rival bid from Asian drinks conglomerate Thai Beverage. Already, Heineken owns a 42% stake in Asia Pacific Brewers, a stake that dates back to 1931.

With full control of APB, Heineken would join beer giants like Anheuser-Busch InBev (BUD), Molson Coors (TAP - Get Report) and SABMiller (SBMRY) in cutting multi-billion dollar deals for brewers in emerging markets like Asia, Latin America and Eastern Europe. The beer sector merger wave also comes at a time when Euromonitor estimates that beer consumption in North America and Western Europe will stall in coming years.

''If agreed, the offer will strengthen Heineken's platform for growth in some of the world's most exciting and dynamic economies with fast-growing populations,'' Heineken said in a statement on Friday. The move would also give Amsterdam-based Heineken, "'direct access to a number of important markets, including Cambodia, China, Indonesia, Malaysia, New Zealand, Papua New Guinea, Singapore, Thailand and Vietnam," the company added.

Heineken, which accounts for just under 10% of the global beer market, has a smaller emerging markets presence than peers ABInbev and SABMiller. Bloomberg Industries analysts also note that were Heineken's bid to be accepted, it would leapfrog SABMiller as the world's second largest brewer.

The beer maker's $4.1 billion bid for the remaining shares of APB comes at a near-20% premium to the brewer's share price in the Singapore market, and tops a bid made by Thai Beverage earlier in the week. Both brewers are bidding on a 40% stake owned by Singapore-based food & beverage, property and publishing conglomerate Fraser & Neave. If its bid is accepted, Heineken would take control of APB, a company it's been involved with since the early 1930s.

Asia Pacific Breweries operates 30 breweries across Asia, in counties like Mongolia, and Papua New Guinea. The company owns popular regional brands like Tiger Beer and Bintang lager.

Heineken's bid may not be the end of the battle, though.

"In our view, this is far from certain," wrote Berenberg Bank analyst Phillip Morrisey, in a note to clients. "[The] strategic/regional ambitions of Thai Beverage and perhaps more so Kirin, as well as the apparent historic reluctance of F&N to exit APB, suggest a deal may prove difficult to complete," Morrisey adds.
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