E-Malt.com News article: Myanmar: Myanmar Economic Holdings wins legal fight for Myanmar Brewery ownership

Myanmar Economic Holdings Ltd., a conglomerate controlled by Myanmar’s military, said on October 31 it has won a legal fight to wrest full control over a brewery from its Singaporean partner, Fraser & Neave Ltd.

An arbitration tribunal ruled that MEHL is entitled to buy Fraser & Neave’s shares in Myanmar Brewery at “fair value” under the terms of their joint-venture agreement, the Yangon-based company said in a statement. MEHL owns 45% of the brewer while the Singapore-listed firm owns the remainder.

The two companies will jointly appoint a valuer to set the price for the acquisition, according to MEHL, which initiated arbitration proceedings in September 2013 after months of fruitless talks with its partner to resolve the spat.

The ruling allows MEHL to claim as its own a prized asset that serves more than 80% of Myanmar’s beer market. It also followed a lengthy corporate dispute that analysts say highlights the risk of doing business with Myanmar’s state-owned enterprises and could damp confidence of investors seeking opportunities in a country still emerging from decades of secrecy and isolation under military rule.

“The conduct of this arbitration shows our commitment to the rule of law and that we will always adhere to due process,” MEHL Managing Director Myint Aung said in the statement.

Singapore-listed Fraser & Neave, which halted trading of its shares earlier on October 31 pending an announcement, didn’t immediately comment on the ruling. The company previously said MEHL had “no basis” for its claim.

Myanmar Brewery, set up in 1995 as one of the country’s first joint ventures, makes Myanmar Beer, Myanmar Double Strong and Andaman Gold. The brewery is Fraser & Neave’s only beer asset, after the company sold its stake in Asia Pacific Breweries Ltd. to Dutch brewer Heineken NV in 2012.

MEHL, previously known as the Union of Myanmar Economic Holdings, first partnered APB in 1995 to set up Myanmar Brewery. APB, itself a joint venture between Fraser & Neave and Heineken at the time, transferred its stake in Myanmar Brewery to the Singaporean firm in 1997.

The dispute started after Thai billionaire Charoen Sirivadhanabhakdi took control of Fraser & Neave last year in a multibillion-dollar debt-fueled acquisition. Arbitration over the spat took place in Singapore, with hearings held in June and July, MEHL said in its statement.

While MEHL is controlled by Myanmar’s military, its precise ownership is ambiguous even to its foreign partners. The company remains on a U.S. Treasury blacklist because of its military ties, even though the U.S. lifted the bulk of its sanctions against Myanmar in 2012.

With far-ranging interests including in transportation and tourism, MEHL and its subsidiaries are popular partners for many foreign investors seeking access to Myanmar’s nascent market.


31 October, 2014