APB sells Heineken-APB shares and undergoes restructuring

The move is in line with the company’s strategic direction in China and taking into account its minority interests in Jiangsu Dafuhao Breweries.

The Board of Directors of Asia Pacific Breweries Limited (“APBL”) together with its controlling shareholder, Asia Pacific Investment Pte Ltd (“APIPL”), that it has on Wednesday reached an agreement (the “Agreement”) with a purchaser, China Resources Snow Breweries Limited (the “Purchaser”), for the sale of all the issued shares (the “Transaction Shares”) in the share capital of Heineken-APB (China) Pte Ltd (“HAPBC”) which are held by each of APBL and APIPL to the Purchaser (the “Proposed Transaction”). HAPBC is held 50:50 by APBL and APIPL and APIPL in turn is held 50:50 by the Heineken group and Fraser and Neave, Limited. As part of the Proposed Transaction, the name of HAPBC will be changed before completion (“Completion”). 

As at the date of this Announcement, HAPBC holds 100% of the registered capital of each of 

1. Guangzhou Asia Pacific Brewery Co. Ltd (“GAPB”) 
2. Heineken APB (China) Management Services Co. Ltd (“HAPBCMC”); 
3. Hainan Asia Pacific Brewery Co. Ltd (“HAPCO”); 
4. Heineken Trading (Shanghai) Co. Ltd (“HTS”); and 
5. Shanghai Asia Pacific Brewery Co. Ltd (“SAPB”); 

and 49% of the registered share capital of Jiangsu Dafuhao Breweries Co. Ltd (“DFH”). 

GAPB, HAPBCMC, HAPCO and HTS are collectively known as the “Non-Sale PRC Interests” and SAPB and DFH are collectively known as the “Sale Interests”. 

APBL and APIPL are currently undertaking a restructuring exercise to transfer the Non-Sale PRC Interests held by HAPBC to Heineken-APB (China) Holding Pte. Ltd. (“HAPBH”), which is held 50:50 between APBL and APIPL. On the completion of such restructuring exercise, HAPBC will only hold the Sale Interests. The restructured HAPBC will be sold to the Purchaser. The Proposed Transaction is expected to complete in approximately 3 months. 

The Heineken, Tiger and Anchor businesses in SAPB are not part of the Sale Interests and shall be transferred to a newly set-up wholly owned subsidiary of HAPBH. 

The aggregate consideration (the “Consideration”) for the Transaction Shares is RMB 870,000,000 (equivalent to approximately S$162 million) to be received equally between APBL and APIPL subject to the adjustment that if DFH increases its registered capital or issues securities convertible into its shares after the date of the Agreement and before Completion, HAPBC shall subscribe for such share capital or securities in DFH offered to HAPBC and the amount of Consideration shall be increased by the amount paid by HAPBC in respect of such subscription (if any).

The disposal is in line with the Company’s strategic direction in PRC and taking into account its minority interests in DFH, according to an APB report.

The Consideration was arrived at after arm’s length negotiations and on a willing-buyer willing-seller basis, after taking into account the carrying value of Sale Interests, the current market conditions and the minority interests in DFH. At Completion, the Consideration will be paid in cash in USD based on an agreed exchange rate mechanism. 

The Proposed Transaction is subject to an anti-monopoly examination by the relevant PRC authorities. 

The Consideration represents a gain of approximately S$46.6 million after deducting related expenses. By virtue of its 50% stake in HAPBC, APBL’s share of the gain on disposal is approximately S$23.3 million. 

Based on the latest unaudited consolidated accounts of the HAPBC group as at 31 May 2011, the book value of the Transaction Shares amounted to approximately S$93.2 million.

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Tags: APB Heineken, Asia Pacific Breweries, Heineken