E-Malt.com News article: 3009

Singapore’s Asia Pacific Breweries Limited (APBL), announced on 26 July 2004 its intention to make an unconditional takeover offer for the purchase of the 23.09% of New Zealand brewer DB Breweries Limited (DB) that it does not already own. The offer price is NZ$9.50 cash per share. This represents a 20.25% premium to the last trade of NZ$7.90. The bid values DB at about NZ$479 million.

In pre-bid agreements, Accident Compensation Corporation (ACC), the largest shareholder in DB after APBL and several other investors, have agreed to sell their entire holdings totalling 4,206,055 shares, into the offer. This means that APBL is entitled to record a relevant interest of 85.25% in the capital of DB.

The offer is being made to enable APBL to privatise and de-list DB, and reflects APBL's strong long-term commitment to its business in New Zealand.

APBL believes that DB's capital expenditure requirements can be met without the need to raise capital on the NZX, thereby making a stock exchange listing of DB less relevant.

APBL's unconditional offer will allow all DB shareholders an excellent opportunity to exit their shares at a strong premium to a market price that is close to its highest level in more than a decade.

The offer is expected to be mailed to all shareholders on August 9. If the offer is mailed on August 9, it will close on September 6, unless extended by APBL.

APBL is a Singapore listed company with brewing operations throughout the Asia Pacific region. It is majority owned by a joint venture of Heineken N V and Singapore-based diversified group Fraser and Neave Limited. APBL produces and markets throughout Asia two of the world's best known beer brands, Heineken and Tiger Beer.

DB produces and markets some of New Zealand's best-known beers including leading brands such as DB Draught, Export Gold, Tui, Heineken and Monteith's.

APBL is being advised jointly by Societe Generale and Mariner Corporate Finance.

DB Breweries Ltd (DB Breweries) is majority owned by SGX mainboard-listed Asia Pacific Breweries Limited (APB). It currently employs approximately 500 people in its breweries, sales and corporate operations throughout New Zealand, and operates four breweries:

1) Monteith's Brewery – Greymouth: From humble origins in 1868, the Monteith's family-owned Phoenix Brewery became the West Coast's most popular brewery for its strong tasting, full-bodied ale. The Phoenix Brewery later merged with a group of small breweries to form Westland Brewing Company, predecessor to today's Monteith's Brewing Company.

2) Waitemata Brewery - Otahuhu, Auckland: This state of the art brewery underwent a NZ$60 million redevelopment, which was completed in 2002. The original Waitemata Brewery opened during a time of international recession and stiff competition. Despite this, the company thrived thanks to the winning partnership of original brewery owner Morton William Coutts and liquor merchant and distributor Henry (later Sir Henry) Kelliher. An integral part of DB Breweries history, Morton Coutts was perhaps best known for his brewing innovations and in particular the invention of Continuous Fermentation (CF), which was developed in 1953 while Morton was head brewer at DB.

3) Tui Brewery – Mangatainoka: An entrepreneur named Henry Wagstaff established the Tui Brewery at Mangatainoka in 1889. His dream was to supply "export quality brews to beer drinkers around the colony" and his ales quickly earned a reputation for excellence. Henry Cowan, the eldest son of a pioneering family, bought the brewery in 1903. He renamed it North Island Brewery Company Ltd and set about plans for expansion. In 1923, it was renamed once again, this time as Tui Brewery. Tui was taken over by DB Breweries in 1969. A large-scale modernization programme was undertaken during the following decades.

4) Mainland Brewery – Timaru: One of the most efficient brewers of premium quality lagers and beers in the world, the Mainland Brewery was designed to carry on traditions set down by our early brew masters. Fitted out with state of the art technology, the brewery has set numerous records for production efficiency and quality standards. DB beers from the Mainland Brewery are distributed throughout the South Island from Nelson to Bluff. The Mainland Brewery is one of the largest employers in the Timaru District contributing significantly to the local economy.

DB Breweries also offers contract packaging services at Waitemata Brewery, Tui Brewery and Mainland Brewery. DB Breweries is nationally and internationally recognized for its packing capabilities and dedication to quality and is associated with some of the world's foremost brewers and have access to world-class technological support. In addition to beer products, it has extensive knowledge and experience in the production of carbonated soft drinks and produces a wide range of soft drink products for some of New Zealand's leading retailers. They are capable of packaging a wide variety of beverages in different pack configurations.

Its key brands are Heineken, Monteith's, DB Draught, Export Gold, Tui, Tiger Beer and Amstel Light.

They have other brands, which include Amstel, Black Draught, Bulls Eye, DB Bitter, Double Brown, Export Dry, Flame, Murphy's and Vita Stout.

Some of these brands are being exported to Australia, Cook Islands, Singapore and the USA.

For the financial year ended 30 September 2003, DB Breweries registered a 13% increase in profit before interest, taxation and exceptional items (EBIT), from NZ$30 million to NZ$34 million. New Zealand was the second best performing market for APB, after IndoChina.

DB Breweries continued its impressive growth trend for the 1st half of the financial year ended 31 March 2004. EBIT registered a 14% increase from NZ$23.5 million to NZ$26.8 million.

In 1991, APB entered into a 50/50 joint venture with Brierley Investments Ltd to hold a controlling interest in DB Group Ltd (formerly known as Magnum Corporation Ltd) of New Zealand.

In late 1993, APB raised its equity participation in DB Group (to 54.7%) and assumed management control of the company, which then focused on brewing, wine, liquor and retailing operations in New Zealand. Simultaneously, APB was selling its interest in Austotel (which runs a chain of taverns in Australia) to Brierley Investments.

In 2000, APB announced its intention to make an unconditional written offer for 100% of DB Group through the purchase of the remaining 41.61% of the company, effectively raising APB's stake in DB Group to 76.63%. The year also saw the completion of consolidation and rationalization of operations when the wine and liquor operations were divested, which then allowed DB Group to solely focus on the brewing and marketing of quality beers.


28 July, 2004