Whatever happened to Fraser and Neave's Myanmar Brewery dispute?

There’s been no update in the five months since arbitration.

Fraser and Neave has been surprisingly quiet about the fate of its 55% stake in Myanmar Brewery (MBL). The long silence from F&N has led analysts to speculate about MBL’s likely destiny, especially as the lion’s share of F&N’s profits come from the Myanmar-based company.

A report by DBS analyst Andy Sim noted that an outright sale seemed to be the most likely outcome after F&N lost its arbitration battle versus its joint venture partner Myanmar Economic Holdings (MEHL). An arbitration tribunal decided that MEHL can compel F&N to sell its 55% stake in MBL, but the initial US$246m valuation by MEHL was scrapped and the tribunal ordered a fresh valuation to be done.

Sim estimates that MBL is worth $1.2b, which will give F&N plenty of cash to re-invest in other lucrative ventures.

“At this juncture, the outright sale of MBL looks to be the most probable outcome, though we do not rule out alternative scenarios, given the longer-than-expected lead time,” Sim wrote.

Apart from a sale, some of the possible outcomes include the maintenance of the JV’s status quo with some variation in shareholding. There is also the possibility that F&N ends up purchasing MEHL’s stake and owning MBL fully.

“Assuming FNN could score a coup and acquire its partner’s 45% stake or maintain it at status quo instead, this would be positive for FNN, subject to valuation, in our view. In the widely expected scenario that FNN has to eventually divest its stake, we believe it would be a contender to acquire the stake in Saigon Beer (in which the Vietnam’s Ministry of Industry and Trade is purportedly open to divesting). Key risk to our recommendation is lower-than-expected valuation for MBL,” Sim noted.

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