F&N shareholders approve HEINEKEN's offer to acquire interests in APB and APIPL

Friday, 28. September 2012 08:59

Amsterdam, 28 September 2012 - Heineken N.V. ('HEINEKEN') announced that at today's Extraordinary General Meeting ('EGM') in Singapore, shareholders of Fraser and Neave, Limited ('F&N') voted in favour of the proposed disposal by F&N of its direct and indirect interests in Asia Pacific Breweries Limited ('APB') and F&N's interest in the non-APB assets held by Asia Pacific Investment Private Limited ('APIPL'), for a total consideration of S$5.6 billion or €3.5 billion[1] (the 'Transaction').

The Transaction remains subject to regulatory approvals in Singapore and New Zealand and is expected to close in November 2012, after which APB will be fully consolidated into HEINEKEN's accounts.

Today's shareholder approval represents an important milestone for HEINEKEN in gaining full control of APB. HEINEKEN currently holds, directly and indirectly, a 55.6% stake in APB. Upon completion of the Transaction HEINEKEN will own a 95.3% stake[2] in APB.

Commenting on the Transaction, HEINEKEN Chairman and Chief Executive Officer Jean-François van Boxmeer said:

"I am pleased that F&N's shareholders have voted in favour of our offer for APB and been able to realise full value from their investment. Once completed, this transaction will further increase HEINEKEN's financial and geographic exposure to emerging markets and strengthen our competitive position in one of the most exciting regions in the world. Our regional headquarters will remain in Singapore with the Heineken® and Tiger® brands at the heart of our portfolio. We are now ideally positioned to expand our presence across the region and create long-term financial and strategic value for our shareholders. Finally, I'd like to thank Chairman Lee and the other members of the F&N board, who have supported our offer and recommended it to the F&N shareholders."

The Transaction and MGO
On 17 August 2012, HEINEKEN announced that, through its wholly-owned subsidiary HIBV, it had signed the Definitive Agreements with F&N regarding the Transaction whereby HEINEKEN agreed to pay S$53.00 per APB share for F&N's entire (direct and indirect) 39.7% effective stake in APB for a total consideration of S$5.4 billion (€3.4 billion[1]) and a total consideration of S$163 million (€103 million[1]) for F&N's interest in the non-APB assets held by APIPL. Since the announcement on 17 August 2012, HEINEKEN has purchased a 13.7% stake in APB (including the 8.6% stake it acquired from Kindest Place Groups Limited on 24 September 2012) for a total consideration of S$1.9 billion[3] (€1.2 billion[1]).

Upon completion of the Transaction, HEINEKEN will, in aggregate, own a 95.3% stake[2] in APB. HIBV will then make a Mandatory General Offer ('MGO') for all the shares of APB that the HEINEKEN group does not already own, in accordance with the Singapore Code on Take-overs and Mergers. Subsequently HEINEKEN will seek to delist APB.

(1). Based on a S$/€ exchange rate of 1.58 as of the close of Singapore business on 27 September 2012.
(2). Assuming HEINEKEN will not acquire any additional APB shares prior to completion of the Transaction.
(3). Based on 35,491,130 shares acquired at S$53.00 and 13,000 shares acquired at S$52.90.

If all remaining shares would be tendered in the MGO, the total consideration under the MGO will be S$0.6 billion (€0.4 billion[1]). Further details of the MGO have been provided in the Pre-Conditional MGO Announcement prepared by Credit Suisse and Citi on behalf of HIBV on 17 August 2012.

The MGO will not be made unless and until the Transaction has completed.

Compelling strategic transaction
APB will provide HEINEKEN direct access to two of the most exciting emerging markets in the world: Southeast Asia & the Pacific Islands and China. HEINEKEN believes that the Transaction will generate long-term financial and strategic value for its shareholders based on its compelling strategic merits: 

  • Southeast Asia & the Pacific Islands is a growing, dynamic region of over 600 million people with favourable demographics, strong economic development and a fast growing beer market. 
  • APB is a leading brewer in Southeast Asia & the Pacific Islands, with the strongest and most widespread presence in the region (#1 and #2 positions in 10 countries; 25 breweries in 14 countries).   
  • HEINEKEN will significantly increase its exposure to emerging markets, establishing itself as the brewer with the most diversified emerging markets footprint. On a pro-forma basis for 2011, HEINEKEN will derive 62% of its consolidated beer volume and 55% of its EBIT (beia[4]) from emerging markets (versus 59% of its consolidated beer volume and 50% of its EBIT (beia[4]) excluding APB).
  • HEINEKEN will be able to exploit the growth potential of the International Premium Segment ('IPS') in the region with the Heineken® and Tiger® brands. 
  • HEINEKEN intends to fully develop the Tiger® brand internationally and HEINEKEN's brand portfolio will be strengthened with APB's other strong regional and local brands.
  • HEINEKEN will be able to capture the developing and profitable IPS in China through a long-term investment approach. 

Financial impact of the Transaction
Following completion of the Transaction, HEINEKEN will fully consolidate APB in its accounts, providing an improved reflection of HEINEKEN's economic exposure to APB and greater transparency of its operations in the Asia Pacific reporting region. 

(4). Before exceptional items and amortisation of brands.

The key financial metrics for the Transaction are (assuming completion of the MGO and HEINEKEN achieving 100% ownership in APB):  

  • Pro-forma 2011 consolidated volume will increase by 8% to 178.3 mhl, revenue by 8% to €18.5 billion[5], pro-forma 2011 EBITDA (beia[4]) by 9% to €4.0 billion[5] and pro-forma 2011 EBIT (beia[4]) by 10% to €3.0 billion[5].
  • The indicative EV/EBITDA (beia[4]) for the twelve months period ending 30 June 2012 is estimated to be 17.1 times[6].
  • Assuming 100% acquisition of APB on 1 July 2011 and taking into account the net profit of APB of S$ 390 million for the last twelve months ending 30 June 2012 and interest cost of 3% per annum, the transaction would have been accretive to Heineken's earnings per share on a pro forma basis for the last twelve months ending 30 June 2012.
  • Pro-forma net debt/EBITDA (beia[4]) for the twelve months period ending 30 June 2012 is 3.3x. 

In line with IFRS accounting standards, HEINEKEN will revalue its current stake in APB at closing of the Transaction. The non-cash amount arising from such revaluation will be treated as an exceptional item.

None of the above statements or any other statement in this news release should be interpreted to mean that earnings per share of HEINEKEN, HIBV or APB will necessarily be greater than those for their respective preceding financial periods.

Please review the appendix for further information.

Financing
HEINEKEN has sufficient cash and committed facilities available to finance the Transaction as well as the MGO. HEINEKEN will fund the Transaction and the MGO through available cash of approximately €1 billion, its committed undrawn revolving credit facility of €2 billion and a new bridge commitment of approximately €2.5 billion from its banks. Average acquisition financing costs are expected to be below 3% per annum.

HEINEKEN has a clearly articulated financial policy and is committed to returning to a net debt/EBITDA (beia[4]) ratio of below 2.5 times within 24 months of completion of the MGO.

Timing and other
The Transaction remains subject to clearance by the Competition Commission Singapore and approval by the Overseas Investment Office in New Zealand.   

(5). Based on an average S$/€ exchange rate for the year ending 31 December 2011 of 1.75.
(6). Based on a price per APB share of S$53.00 for 100% of the share capital of APB, APB's balance sheet as at 30 June 2012 (valuing minority interests and associates at book value) and an EBITDA for the twelve months period to 30 June 2012 of S$796 million.

The Transaction is expected to complete in November 2012. Subsequently the MGO process will be launched, which will take at least six weeks to complete.  Following the MGO, HEINEKEN will seek to delist APB.

Media conference call
A conference call for the general media is scheduled for 9:45 a.m. CET today. Members of the media can use the following dial-in information:

Location Local number Toll free number
Belgium 32 (0) 2290 1401 0800 50 856
Germany 49 (0) 6103 485 3001 0800 10 12 072
Japan 81 36 404 0431 00531 440 034
Netherlands 31 (0) 45 6316905 0800 2658543
Singapore Not available 800 852 3809
United Kingdom 44 207 153 2027 0800 358 2337
United States 1 480 629 9726 1 877 941 2930

  
Reporters calling from countries not listed above, should dial the United Kingdom number. The conference title is "Heineken APB".

Analysts and investors conference call
A conference call for analysts and investors is scheduled for 11:00 a.m. CET today and will be broadcast live via the company's website at www.heinekeninternational.com . Analysts and investors can use the following dial-in information:

Location Local number Toll free number
Netherlands 31 (0) 45 631 6902 Not available
United Kingdom 44 207 153 2027 Not available
United States 1 480 629 9673 1 877 941 1469

Analysts and investors calling from countries not listed above, should dial the United Kingdom number. The conference title is "Heineken APB".

Directors' Responsibility Statement
The directors of each of HEINEKEN and HIBV (including those who may have delegated supervision of this press release) have taken all reasonable care to ensure that the facts stated and all opinions expressed in this press release are fair and accurate and that there are no other material facts not contained in this news release the omission of which would make any statement in this press release misleading.

Where any information has been extracted or reproduced from published or otherwise publicly available sources or obtained from F&N or APB, the sole responsibility of the directors of each of HEINEKEN and HIBV has been to ensure through reasonable enquiries that such information has been accurately and correctly extracted from such sources or, as the case may be, accurately reflected or reproduced in this press release.

The directors of each of HEINEKEN and HIBV jointly and severally accept responsibility accordingly.

Press enquiries Investor and analyst enquiries
John Clarke George Toulantas
Head of External Communications Director of Investor Relations
E-mail: john.g.clarke@heineken.com E-mail: investors@heineken.com
Tel: +31-20-5239355 Tel. +31-20-5239590
John-Paul Schuirink Lucia Bergamini
Financial Communications Manager Senior Investor Relations Manager
E-mail: john-paul.schuirink@heineken.com E-mail: investors@heineken.com
Tel: +31-20-5239355 Tel: +31-20-5239590
Charles Armitstead
Pendomer Communications
E-mail: charles.armitstead@pendomer.com
Tel:  +44-7703-330-269

Disclaimers
None of the statements made in this press release is intended to be a profit forecast. Consequently, none of such statements should be interpreted to mean that earnings per share in 2012 will necessarily be greater than those in 2011.

Further, all statements other than statements of historical facts included in this press release are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as "seek", "expect", "anticipate", "estimate", "believe", "intend", "project", "plan", "strategy", "forecast" and similar expressions or future or conditional verbs such as "will", "would", "should", "could", "may" and "might". These statements reflect HEINEKEN and HIBV's current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information.

Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Shareholders and investors should not place undue reliance on such forward-looking statements, and HEINEKEN and HIBV does not undertake any obligation to update publicly or revise any forward-looking statements.

Editorial information:

HEINEKEN is a proud, independent global brewer committed to surprise and excite consumers with its brands and products everywhere. The brand that bears the founder's family name - Heineken® - is available in almost every country on the globe and is the world's most valuable international premium beer brand. HEINEKEN's aim is to be a leading brewer in each of the markets in which it operates and to have the world's most valuable brand portfolio. HEINEKEN wants to win in all markets with Heineken® and with a full brand portfolio in markets of choice. HEINEKEN is present in over 70 countries and operates more than 140 breweries with volume of 214 million hectolitres of group beer sold. HEINEKEN is Europe's largest brewer and the world's third largest by volume. HEINEKEN is committed to the responsible marketing and consumption of its more than 200 international premium, regional, local and specialty beers and ciders. These include Amstel, Birra Moretti, Cruzcampo, Desperados, Dos Equis, Foster's, Heineken, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star, Strongbow, Tecate, and Zywiec. Our leading joint venture brands include Cristal, Kingfisher, Tiger® and Anchor. In 2011, revenue totaled EUR 17.1 billion and EBIT (beia) was EUR 2.7 billion. The number of people employed is around 70,000. Heineken N.V. and Heineken Holding N.V. shares are listed on the Amsterdam stock exchange. Prices for the ordinary shares may be accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on the Reuter Equities 2000 Service under HEIN.AS and HEIO.AS. Most recent information is available on HEINEKEN's website: www.theHEINEKENcompany.com.

Overview of Asia Pacific Breweries

Asia Pacific Breweries Limited (APB) was established as Malayan Breweries Limited in 1931. The company opened its first brewery in Singapore and launched the award-winning Tiger® beer a year later. The company was renamed to Asia Pacific Breweries Limited in 1990.

APB brews and sells beer supported by 25 breweries in 14 countries in Asia and the Pacific region, including Singapore, Cambodia, China, Indonesia, Laos, Malaysia, Mongolia, New Caledonia, New Zealand, Papua New Guinea, Solomon Islands, Sri Lanka, Thailand and Vietnam.

APB has market leading positions across Asia, including number-one positions in Thailand, Malaysia, Singapore and Indonesia.

The award-winning Tiger® brand was launched in 1932. Tiger® is now brewed in 10 markets and exported to over 65 countries and has been growing globally at 5.6% per annum.

In addition to the Tiger® brand, APB has an extensive portfolio of over 40 beer brands and brand variants, including Anchor beer, ABC Extra Stout and Baron's Strong Brew. APB also brews and sells Heineken® beer in nine markets across Asia and the Pacific namely Singapore, China, Indonesia, Laos, Malaysia, New Caledonia, New Zealand, Thailand and Vietnam. APB also has strong local brands, amongst others Gold Crown in Cambodia, SP Lager in Papua New Guinea, Tui in New Zealand and Larue in Vietnam.

APB's revenue[7] and EBITDA for the year ending 30 September 2011 were S$2,974 million and S$658 million, respectively.

In the first nine months of fiscal year 2012, APB reported strong revenue[7] growth of 13.7% and an EBITDA increase of 27.3%, compared to the same period in the fiscal year 2011. APB's revenue[7] and EBITDA for the twelve months period ending 30 June 2012 were S$3,282 million and S$796 million, respectively.

(7). APB reports revenue including excise tax duties, whereas HEINEKEN reports revenue net of excise tax duties. For APB, excise tax duties are included in cost of sales. The reported revenue figures for APB in this section have not been restated.

Appendix - Basis of pro-forma combined financial metrics

The pro-forma combined financial metrics for the year ended December 31, 2011 are presented to show how these metrics might have looked if the Transaction had occurred on January 1, 2011. The unaudited pro forma combined financial metrics have been derived by applying pro forma adjustments to the historical financial information of APB for the statutory year ended September 30, 2011.

The unaudited pro-forma combined financial metrics have been presented for informational purposes only and are not necessarily indicative of what the combined company's financial position or results actually would have been had the Transaction been completed as of January 1, 2011. In addition the unaudited pro-forma combined financial metrics do not purport to project the future financial position or operating results of the combined company. There can be no assurance that the assumptions used in the preparation of the pro forma combined financial metrics prove to be correct. 

  • The unaudited pro-forma combined financial metrics are based on:
  • The consolidated financial statements of HEINEKEN for the year ended December 31, 2011, prepared in accordance with IFRS;
  • Pro-forma consolidated information of APB derived from the consolidated financial statements of APB and APIPL for the year ended September 30, 2011 prepared in accordance with Singapore Financial Reporting Standards ("Singapore FRS"), and adjusted by adding the three months period ended December 31, 2011 and deducting the three months period ended December 31, 2010 and certain pro-forma adjustments for accounting policy alignment;
  • Pro-forma adjustments to eliminate intercompany volume and revenue, and HEINEKEN's share of profit of APB and APIPL currently included in the HEINEKEN results for the year ended December 31, 2011;
  • Certain pro-forma adjustments relating to the purchase price allocation;
  • APB and APIPL financial metrics are converted to EUR:SGD for the year ended December, 31 2012 of 1.75. 

In addition, the basis of calculation for other pro-forma financial metrics are set out below: 

  • Pro-Forma EPS accretion for the LTM June 2012: Based on the reported net income of APB for the last twelve months ending 30 June 2012, elimination of equity accounted net income of APB for the same period, depreciation and amortisation adjustment relating to purchase price allocation for the same period and deducting the interest cost to be incurred by Heineken to fund the purchase consideration. Interest costs on acquisition debt assumed to be 3% per annum.  Assumed 100% acquisition of APB by Heineken as of 1 July 2011 for the pro-forma analysis.
  • Pro-Forma Net debt / EBITDA (beia) as of LTM June 2012: Pro-forma net debt is based on HEINEKEN, APB and APIPL reported net debt as of 30 June 2012, and the total consideration required for the acquisition of 58.1% in APB, F&N's interest in non-APB assets held by APIPL and transaction costs (stamp duty, fees and cash cost of options). Pro-forma EBITDA is based on HEINEKEN and APB reported LTM EBITDA (30 June 2012), includes elimination of HEINEKEN's share of net income from APB currently equity accounted by HEINEKEN, APB's share of net income from H-APB China currently equity accounted by APB, addition of 100% of EBITDA from H-APB China which will be consolidated post-transaction and other consolidation adjustments. Adjustments are based on LTM June 2012.

Key financial metrics

FYE 31-Dec-11 HEINEKEN APB Eliminations[12] Adjustments Pro-forma
Consolidated
beer volume
(mhl) [8]
164.6 11.9 (0.5) 2.3[13] 178.3
Net revenue
(€m)
17,123 1,242[11] (41) 170[13] 18,493
EBITDA (beia)
(€m) [9]
3,682 428 (97) 13[13] 4,026
EBIT (beia)
(€m) [9]
2,697 388 (97) (26)[13],[14] 2,962
EBIT (beia) / hl
(€) [10]
14.9 28.6[14] 15.7[14]
EBIT (beia)
margin
15.8% 28.8%[14] 16.0%[14]

Source: HEINEKEN, APB

Note: Pro-forma APB for the year ending 31 December 2011, based on FYE 30 September 2011, 3 months to 31 December 2011 and 3 months to 31 December 2010 financials APB financials converted to EUR based on average EUR:SGD for 1 January 2011 to 31 December 2011 of 1.75, as per Bloomberg.
(8). Includes 100% of beer volume produced and sold by consolidated companies (excluding the beer volume brewed and sold by joint venture companies).
(9). EBITDA (beia) and EBIT (beia) include share of profit of associates and joint ventures.
(10). Based on EBIT (beia) excluding share of profit of associates and joint ventures.
(11). Includes pro-forma adjustment for excise duties included in APB Revenue.
(12). Pro-forma elimination of intercompany volume and revenue, and HEINEKEN's share of profit from APB currently equity accounted by HEINEKEN.
(13). Includes 100% of pro-forma adjustment for H-APB China which will be consolidated post-transaction, elimination of H-APB China equity income in APB, and other consolidation adjustments.
(14). Includes pro-forma depreciation adjustment relating to purchase price allocation of €30million.




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Source: HEINEKEN NV via Thomson Reuters ONE

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