DB shares soar as Heineken bids for full ownership

5.20pm UPDATE

The announcement by DB Breweries' parent company Asian Pacific Breweries that it was seeking a 100 per cent holding in the company sent the brewer's stock soaring today.

Singapore-listed APB, 42.5 per cent controlled by Dutch giant Heineken NV, said it would offer $9.50 per share for the 23 per cent in DB it did not already own, valuing the company at about $479 million.

The offer is a 20 per cent increase on DB's closing price of $7.90 on Friday. Today the share price shot up $1.50, or 19 per cent, to a record $9.40 following the takeover announcement.

APB, which is also 38 per cent owned by Singapore soft drinks group Fraser & Neave, has already secured agreements from the Accident Compensation Corporation (ACC) and several other investors which will boost its holding from 76.91 per cent to 87.1 per cent.


The offer will be mailed to shareholders on August 9 and to close on September 6.

Macquarie Equities investment director, Arthur Lim, said this is the latest of several attempts by APB to fully takeover DB. Previously, institutional investors had blocked APB's takeover attempts as they did not think the offers reflected DB's underlying value.

They have been proved right, given the stock's steady and not so slow rise in the last four years.

In late 2000, APB boosted its shareholding in DB from 58.4 per cent to just over 76 per cent. The company had sought a 100 per cent stake in DB through a $2.80 per share offer, which independent adviser PricewaterhouseCooper deemed was not fair. The company's weighted average share price for the six months to February 2000 was $2.28.

Mr Lim said the current offer was "realistic", which would probably alleviate resistance by institutional investors.

"At this kind of premium it stands a much, much better chance than the...attempts in the past," Mr Lim said.

"The takeover now, at what is a very decent premium to the (Friday) closing price, seems to suggest that this time around that they do want this particular bid to be successful.'

Mr Lim said by gaining full control of DB, APB would gain access to cashflow and total flexibility to operate without going to minority shareholders to approve new initiatives on an ongoing basis.

APB said in a statement that DB's capital expenditure requirements could be met without the need to raise capital on the NZX, thereby making a stock exchange listing of DB less relevant.

APB is a Singapore-listed company with brewing operations throughout the Asia-Pacific. It is majority owned by a joint venture of the Dutch brewing giant Heineken and Singapore-based diversified group Fraser and Neave Limited. APB produces and markets Heineken and Tiger Beer throughout Asia.

DB produces and markets beer in New Zealand such as DB Draught, Export Gold, Tui, Heineken and Monteith's.

APB is being advised jointly by Societe Generale and Mariner CorporateFinance, while DB said in a statement it would appoint an independent adviser to report on the merits of the offer.

For the six months to March 31, DB reported a 2.1 per cent rise in net profit to $17.2 million. Sales for the period were up 7.3 per cent to $182.9 million and pre-tax profit rose 14.2 per cent to $26.8 million.

- NZPA