F&N Shareholders Approve Heineken’s Offer to Acquire Interests in APB and APIPL

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.

28 Sep 2012 --- Heineken N.V. has 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 (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 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.”

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 billion1) and a total consideration of S$163 million (€103 million1) 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 billion3 (€1.2 billion1).

Upon completion of the Transaction, HEINEKEN will, in aggregate, own a 95.3% stake2 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.

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). 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.

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 (beia4) from emerging markets (versus 59% of its consolidated beer volume and 50% of its EBIT (beia4) 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.

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.

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, pro-forma 2011 EBITDA (beia4) by 9% to €4.0 billion and pro-forma 2011 EBIT (beia) by 10% to €3.0 billion.
•  The indicative EV/EBITDA (beia4) for the twelve months period ending 30 June 2012 is estimated to be 17.1 times.
•  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) 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.

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 (beia4) ratio of below 2.5 times within 24 months of completion of the MGO.

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