April 1, 2023

DealBook: Heineken Faces Challenge Over Asian Brewer

LONDON — Heineken’s efforts to secure a controlling stake in Asia Pacific Breweries is facing a setback after Thai Beverage increased its stake in Fraser Neave, the Singapore-based conglomerate that had agreed to sell its rights in the Asian brewer to Heineken for around $4.1 billion.

Fraser Neave announced on Monday that Thai Beverage was increasing its stake to 26.2 percent, making it the company’s largest shareholder and putting Thai Beverage in a strong position to dictate whether Fraser Neave shareholders support Heineken’s takeover offer.

Kindest Place, a separate company controlled by the son-in-law of Thai Beverage’s chairman, also has bought an 8.6 percent stake in Asia Pacific Breweries. This month, the company had offered to buy Fraser Neave’s 7.3 percent direct stake in the Asian brewer.

Heineken plans to use Asia Pacific Breweries’ market share across the region to bolster its own operations in Asia. The jockeying may force Heineken to increase its offer for the 40 percent stake in the Asian brewer that Fraser Neave owns through a joint venture with Heineken.

Analysts say Heineken may have to raise its $40-a-share offer to around $44 to secure control of Asia Pacific Breweries without having Thai Beverage as a vocal minority owner.

“We think that Heineken would prefer not to have Thai Bev as an ongoing minority within A.P.B., which could continue to restrict how that company is managed,” Nomura analysts said in a note to investors.

Thai Beverage’s stake is not Heineken’s only potential problem. The Japanese brewer Kirin also owns a 15 percent share of Fraser Neave and may look to acquire the company’s soft drinks business.

Fraser Neave shareholders are expected to vote on Heineken’s takeover offer by early September. If approved, the deal will close by the end of the year.

The efforts to control Asia Pacific Breweries come as brewers are turning to emerging markets because of a slowdown in Western economies.

Earlier this year, Anheuser-Busch InBev, whose beer brands include Budweiser and Stella Artois, agreed to buy the half of the Mexican brewer Grupo Modelo that it did not already own for $20.1 billion. SABMiller also bought Foster’s Group, the biggest beer company in Australia, for $10.15 billion late last year.

Article source: http://dealbook.nytimes.com/2012/08/14/heineken-faces-challenge-over-asian-brewer/?partner=rss&emc=rss

Extra Tax Revenue to Delay Debt Crisis

The new estimate creates a significant grace period for Congress to consider an increase in the maximum amount that the government can borrow, a step that House Republicans say they will not take without an agreement to curb spending.

Federal borrowing is still likely to hit the legal limit on May 16, the Treasury said, so this week it will begin to take emergency steps to buy additional time under the cap. Those steps, plus the increase in tax receipts, which have reduced the need for borrowing, will delay a crisis by about a month — to August from July.

“While this updated estimate in theory gives Congress additional time to complete work on increasing the debt limit, I caution strongly against delaying action,” the Treasury secretary, Timothy F. Geithner, wrote Monday to lawmakers.

Mr. Geithner has warned repeatedly that failing to raise the ceiling would force the government to default on its debts and obligations. That, he wrote, “would have a catastrophic economic impact that would be felt by every American.”

Many Republicans have publicly agreed that Congress must raise the ceiling, although they insist that the White House must first agree to some form of meaningful spending limits. A vocal minority of members, however, have said that they are reluctant to raise the limit, and that Mr. Geithner and others ringing alarm bells have overstated the possible consequences of leaving the limit in place.

The debates have become a standard feature of Washington politics in the last two decades, cropping up when federal borrowing nears the limit while power is divided between the two parties. In 2006 and 2007, it was Democrats who inveighed against Republican arguments that debt increases were necessary.

In the past, Congress has always resolved its differences in time to avoid a debt crisis.

Vice President Joe Biden plans to convene White House staff and Congressional leaders Thursday to pursue an agreement on the terms of an increase. There is a growing consensus among Democrats that some restrictions on spending are reasonable and necessary to secure an agreement with Republicans.

To clear as much time as possible for that political process, the Treasury said on Monday that it would take the first in a series of emergency steps authorized by law this Friday. It will suspend a program under which it borrows money from state and local governments to help those governments meet legal obligations to invest in tax-exempt bonds.

The issuance of the State and Local Government Treasury securities, known as “slugs,” are largely a convenience for the governments. A senior Treasury official said the program’s suspension might not cost those governments any significant amount of money, but it would require them to find alternative investments.

The program has been suspended six times in the last two decades as the federal government bumped against the debt ceiling, most recently in 2007.

The Treasury said it would begin to take additional steps on May 16, including suspending programs under which the government borrows money from pension funds for federal employees and then pays interest to those funds. By law, the Treasury must make up for the lost interest payments once Congress raises the debt ceiling.

The ceiling is now set at $14.29 trillion. The government must constantly borrow more money because its commitments vastly exceed its revenue. The Treasury projected that the government would need to borrow $299 billion between April and June, and that it would hit the debt limit in early July.

It now projects that the government will need to borrow $142 billion during that period, thanks to the increase in tax revenue. That leaves enough room for the government to keep borrowing until August.

Article source: http://feeds.nytimes.com/click.phdo?i=a65bb497b5a25343bc3c2636977d30fb