AMSTERDAM (AP) — Heineken NV continued to inch toward a
takeover of Tiger beer maker Asian Pacific Breweries on Wednesday,
revealing that it has purchased a 2.68 percent stake in the company for
around $290 million, even as it struggles to buy a much larger,
controlling stake, from Singapore’s Fraser and Neave for $4.7 billion.
The
news comes on the same morning Heineken reported weak first-half
earnings, with margins hurt by rising costs, although the company did
report an increase in sales and market share.
Heineken, which
reports earnings twice a year, said net profit was €783 million ($976
million), up from €605 million in the same period a year ago. The
company said profit would have fallen around 5 percent if not assisted
by factors such as a €131 million gain from the sale of a brewery in the
Dominican Republic this year, and high restructuring costs last year.
Chief
Executive Jean-François van Boxmeer said the Asian Pacific Breweries
deal was an important part of Heineken’s future growth plans.
APB’s
business "provides direct access to two of the world’s most exciting
growth regions for beer – Southeast Asia & the Pacific Islands, and
China," he said in a statement. "We are working towards a swift
completion of the transaction and are looking forward to ongoing growth
and success in the region, led by the Heineken and Tiger brands."
The
deal has proved difficult to close. Heineken has long been
co-controller of APB together with F&N. In July, Heineken offered
S$50 per share for F&N’s 39.7 percent stake, in a
management-approved deal which would have given Heineken 81.6 percent.
But
Heineken was caught off guard Aug. 7, when rival Thai Beverage, which
owns 8 percent of APB, offered Fraser and Neave 55 Singapore dollars
($43.91) per share for a 7.3 percent stake in APB — which would give it
clout to resist a Heineken buyout. Thai Beverage-allied companies also
have shares in F&N and influence on its board.
In response,
Heineken raised its offer for the F&N stake to S$53 over the
weekend, arguing that its offer is superior since it is for F&N’s
entire stake.
Heineken’s new offer, again supported by F&N’s
board, added a "breakup" fee of $42 million for Heineken if Fraser
shareholders reject the offer.
Heineken did not reveal who sold it
the 2.68 percent stake, though it noted it had purchased shares on and
off the open market for S$53 per share.
In its fisrt-half results,
the company said wage costs rose 6.6 percent; energy costs rose 6.9
percent; commodity costs rose 9.7 percent; and marketing costs rose 1.7
percent, leading to 6.2 percent higher expenses overall.
First
half sales rose 5 percent to €8.78 billion, which Heineken said was due
to a mix of volume growth, higher selling prices and acquisitions.
Analyst Richard Withagen of SNS Securities said in a note that the results were worse than expected.
"Heineken’s first half 2012 results were below expectations, both on the revenue and operating
profit level," he said in a note.
"The company expects a stronger performance in the second half, which is in line with our
estimates." He rates shares a hold.
In early trading shares fell 3.7 percent to €42. 84.
Copyright 2012 The Associated Press.