Winning full control of apb opportunity or challenge for heineken in asian beer markets

BUSI 1357-Global BusinessMr. Alan Go

Group 2: TRAN LONG, JIN-XIN, DO TON MINH KHOA, BATBAYAR BATTUMUR MYUNG SUNNA, WEY CHEN LING,

“ Winning full control of APB: Opportunity or

challenge for Heineken in Asian beer markets?”

http://www.gre.ac.uk/

Content• Background

• Companies Overview

• Context To The Offer

• The Aims Of Heineken’s Strategy

• Opportunities and Challenges

• Conclusion

• Reference

• Slowing growth in mature markets - Western Europe and North America

• Rising costs and the growing popularity of low-carbohydrate beers and other drinks

Beer manufacturing industry

• In 2008, Anheuser - Busch accepted the offer of $ 52 billion of InBev → Anheuser - Busch Indev

• In 2011, SABMiller spent a $10.15 billion takeover of Foster’s Group

The world’s major brewers have to consolidate, employ Global strategy to capture greater market share and access into

emerging markets through horizontal mergers and acquisitions

Background

Background | Company Overview| Offer Context| Strategy’s aims| Opportunities & Challenges| Conclusion

• Capitalise on a recent event on 28th September - the Heneiken’s acquisition of Asia Pacific Breweries

• Horizontal M&A trends in global business

Winning full control of APB: Opportunity or challenge for Heineken in Asian beer markets?

Justification of the Research question


• A Dutch brewing company was founded in 1864 by Gerard Adriaan Heineken

• Europe’s largest brewer and the world’s third largest by volume

• Presence in over 70 countries, more than 140 breweries with volume of 214 million hectolitres

• In 2011, revenue totaled EUR 17.1 billion and EBIT was EUR 2.7 billion

Company Overview


• A leading brewer in Southeast Asia & the Pacific Islands

• 25 breweries in 14 countries in the Asia - Pacific region

• An extensive portfolio of over 40 beer brands.• In 2011, revenue totaled S$2,974 million and EBIT

was S$658 million.

APB

Company Overview


1931

• Thailand's largest and one of the largest beverage alcohol companies in South East Asia

• 4 segments business line: spirits, beer, non-alcohol beverages and food

• The owner, Charoen Sirivadhanabhakdi, is the second richest billionaire in Thailand

• Control 30.7% shares of Fraser and Neave (F&N)

Company Overview


Context to the offer


offered to buy 22 % in F&N for

S$2.78 billion

18 Jul 20 Jul 7 Aug 17 Aug

S$5.6 billion offer for the

whole of APB

S$5.1 billion offer for the

whole of APB

KPG (a company link to ThaiBev)

offered for F&N's direct 7.3%

stake in APB

Context to the offer


S$8.7 billion offer to take full

control of F&N

13 Sep 18 Sep 25 Sep 28 Sep

Shareholders of F&N agreed

to sell their stake in a beer

joint venture to Heineken

for about S$5.6 billion

Agreed to support Heineken’s bid to gain

control of APB on the condition that

Heineken does not make a counter offer

for F&N

acquired KPG’s shares in APB,

representing 8.6% of the total

issued share capital of APB

• Expand geographic coverage with access to emerging markets

• Improve the operation efficiency, increase market share

The Aims Of Heineken’s Horizontal Acquisition Strategy


• Strengthen HEINEKEN’s portfolio



• A “must-do deal” to prevent a competitor from emerging markets

Implication



Beer products Non-beer products

• Heighten its product differentiation• Enhance its image with stakeholders - Heineken shares were up

1.2% after the deal

Implication



• Asian – Pacific region is growing on population and economic

Opportunities

Opportunities and Challenges


(Source: The Global Small Business Blog, 2010)

• APB knows well about Asian beer markets• Tiger, Bintang and Anchor of APB are among the most famous

beer brands in Asia

OpportunitiesOpportunities and Challenges


(Source: Canadean, Plato , APB, 2011)

• Heineken's business in the Asia-Pacific region was not well-consolidated

• Heineken’s debt ratio increased to 3.3, more than its target 2.5

• Potential competitors in Asian markets

Challenges

Opportunities and Challenges


• Heineken has conducted the global strategy through horizontal acquisition

• Horizontal acquisition helps the companies improve their performance on many aspects: brand expansion, reputation, market share, and profit

• Beside opportunities, there are many challenges for Heineken - Not all the acquisition is completely successful

Big lessons

• Analyse data in order to clarify the situation of Heineken and identify the challenges it may encounter after acquiring APB.

Next step

Conclusion


Reference• Cavusgil, S. T., Knight, G. and Riesenberger, J. R. (2012) International Business: The New Realities. 2nd

International Edition. Prentice Hall: New Jersey.• Danubrata, E. and Blenkinsop, P. (2012) “Heineken wins Tiger battle; focus shifts to F&N fight” Reuters, 28 Sep.

Available at: http://www.reuters.com/article/2012/09/28/us-apb-shareholders-idUSBRE88R05N20120928 (Accessed: 9 Oct 2012).

• HEINEKEN (2012) Press releases. Available at: http://www.heinekeninternational.com/pressreleasespage.aspx (Accessed: 9 Oct 2012).

• Marketwatch (2012) “Fraser & Neave holders approve Heineken's APB bid” Marketwatch - The Wall Street Journal, 28 Sep. Available at: http://www.marketwatch.com/story/fraser-neave-holders-approve-heinekens-apb-bid-2012-09-28 (Accessed: 10 Oct 2012).

• Morton, A. (2012) “GLOBAL: Heineken's APB deal to pay for itself in five years – analyst” Just-drinks.com, 1 Oct. Available at: http://www.just-drinks.com/news/heinekens-apb-deal-to-pay-for-itself-in-five-years-analyst_id108301.aspx (Accessed: 10 Oct 2012).

• Roland, L. (2012) “Heineken Toasts Asia With Deal To Acquire APB” The International Business Times, 28 Sep. Available at: http://www.ibtimes.com/heineken-toasts-asia-deal-acquire-apb-797547 (Accessed: 10 Oct 2012).

• Thompson, A. , Peteraf , M.A., Gamble, J.E., Strickland III, A.J. (2012) Crafting and Executive Strategy – Concepts and Cases. 18th ed. MC Graw-Hill Irwin, New York.

• Wassener, B. (2012) “Heineken Offers $4.1 Billion for Asia Pacific Breweries Stake” Dealbook – The New York Times, 20 Jul. Available at: http://dealbook.nytimes.com/2012/07/20/heineken-offers-4-1-billion-for-asia-pacific-breweries-stake/(Accessed: 10 Oct 2012).

http://www.reuters.com/article/2012/09/28/us-apb-shareholders-idUSBRE88R05N20120928

http://www.heinekeninternational.com/pressreleasespage.aspx

http://www.marketwatch.com/story/fraser-neave-holders-approve-heinekens-apb-bid-2012-09-28

http://www.just-drinks.com/news/heinekens-apb-deal-to-pay-for-itself-in-five-years-analyst_id108301.aspx

http://www.ibtimes.com/heineken-toasts-asia-deal-acquire-apb-797547

Thank you

Q&A

Winning full control of apb opportunity or challenge for heineken in asian beer markets

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