APB swallows Heineken's Bintang, Number One brands

In a bid to extend its portfolio, Asia Pacific Breweries Limited entered into agreements with Heineken to buy major stakes in beer brands Bintang and Number One.

APB bought over Heineken's 68.5% interest in Indonesian-based PT Multi Bintang Indonesia Tbk (MBI) which produces Bintang beer as well as Heineken's 87.3% interest in Grande Brasserie de Nouvelle Caledonie S.A. which produces Number One beer, and is located in New Caledonia.

Upon completion of the transactions, APB will launch a mandatory tender offer for the remaining MBI shares listed on the Indonesia Stock Exchange.

The investment cost APB approximately S$484.4 million for the 68.5% interest in MBI, acquisition of the Bintang brand as well as a 87.3% stake in GBNC. The combined financing will be funded by internal resources, bank borrowings and issuance of bonds. Also, APB will receive S$51.9 million from the sale of its Indian brewery operations. The transaction is immediately accretive to APB's earnings.

In relation to the transactions, Heineken and APB will allow certain undertakings to each other that will regulate the extent to which Heineken will be restricted from competing with APB in Indonesia and New Caledonia and APB will be restricted from competing with Heineken in India. However, this does not mean that the flagship brand of the Group, Tiger beer, will not be available in India as discussions are in progress to ensure continuity of its presence there.

Commenting on the deal, Mr Roland Pirmez, Chief Executive Officer, APB said, "This is a milestone transaction for APB as it further underlines our commitment to be a leading brewery group in the Asia Pacific region. Not only does it extend our footprint to two new countries — Indonesia and New Caledonia — which are very strong performing beer markets, we are also assuming leading market positions via MBI and GBNC. Above all, both MBI and GBNC have impressive track records of profitable growth which will be immediately accretive to APB's earnings."

The acquisition of the leading beer brands and majority stakes in market leaders in both countries provides APB with immediate access to strong cash flows.

MBI produces and distributes several brands, including Bintang beer (under licence from Heineken) in Indonesia and is the leading brewer in the country. For the financial year ended 31 December 2008, it sold 1.6 million hectolitres of beverages (including beer and soft drinks), had revenues of IDR1,325 billion (S$175.2 million), EBITDA of IDR373.6 billion (S$49.4 million) and net profit before tax of IDR314.0 billion (S$41.5 million), with shareholders' equity of IDR344.2 billion (S$45.5 million). MBI is listed on the Indonesia Stock Exchange and is majority-owned by Heineken.

GBNC produces and distributes several brands, including Number One beer in New Caledonia and is the leading brewer in the country. For the financial year ended 31 December 2008, it sold 0.2 million hectolitres of beverages (including alcoholic and non-alcoholic beverages), had revenues of CFPF 3.7 billion (S$62.6 million), EBITDA of CFPF 1.0 billion (S$17.2 million) and net profit before tax of CFPF 0.7 billion (S$11.7 million), with shareholders' equity of CFPF 1.9 billion (S$31.9 million). GBNC is not a listed entity.

The close of the transactions will culminate in an APB network of 36 brewery operations in 13 countries in the Asia Pacific region. APB's diverse footprint would then include Singapore, Malaysia, Cambodia, China, Thailand, New Zealand, Laos, Vietnam, Papua New Guinea, Sri Lanka, Mongolia, Indonesia and New Caledonia.