This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

For Asia Beer Deal, Heineken Needs to Drink Rivals 'Under the Table'

Stocks in this article: BUD TAP KO

Updated to reflect size of Thai Bev bid

NEW YORK ( TheStreet) -- After bidding $4.1 billion for an Asian brewery in a push to buy up emerging market beer brands, Heineken has a bidding war on its hands. In fact, in a fast-consolidating beer industry, the world's third leading brewer may need to drink rivals for emerging market assets under the table, potentially at a steep price.

Heineken is the latest beer giant to join a high stakes pub crawl for assets in fast-growing emerging markets as drinkers in North America and Western Europe cut back on the suds.

On Tuesday, though, Heineken's July bid to buy the remaining shares of Singapore-based Asia Pacific Brewers, the maker of Tiger Beer, was downed. For a much smaller stake in APB, asian drinks conglomerate Thai Beverage topped Heineken's bid by 10%. The Amsterdam-based brewer's next move is a crucial: Heineken already 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) 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.

Acquiring new beer brands in the emerging markets may also be a key to growth for beer conglomerates. For instance, at the end of July, Anheuser-Busch InBev reported an unexpected drop in beer volume in the U.S. and Europe, a trend that can be expected to show up in the results of its peers.

When Heineken first bid on APB on July 20, the brewer highlighted brands like Tiger as crucial to a push into markets with strong growth prospects.

''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,'' said Heineken. 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.

Asia Pacific Breweries operates 30 breweries across Asia, and in addition to Tiger Beer, owns regional brands like Bintang lager.

Heineken, which accounts for just under 10% of the global beer market, has a smaller emerging markets presence than peers AB Inbev and SABMiller. Bloomberg Industries analysts noted in July that were Heineken to eventually succeed in its pursuit for APB, it would leapfrog SABMiller as the world's second largest brewer.

In its July bid, Heineken quickly topped an initial bid for ABP shares from Thai Beverage in both size and price.

Both brewers are bidding APB shares owned by Singapore-based food & beverage, property and publishing conglomerate Fraser & Neave; however Heineken is seeking full control, while Thai Bev is bidding on a minority stake.

Meanwhile, F&N is reportedly looking at divesting its brewing assets and then selling out its non-alcoholic drink brands to soda giants like Coca-Cola (KO).

As drinks giants parse over F&N's assets, including its stake in APB, Heineken's hand could be forced.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs