This will limit the company’s ability to acquire companies in other areas, including the surging Brazil market. Henequen hopes to bring its debt down through repayments and cash generation within two years, according to the Journal, so its lost deals will depend largely on the cycle of mergers. Shares of Henequen were up 0. 86 percent to 46. 39 euros at Friday’s close. Shareholders of Fraser & Nave, the Singapore conglomerate that owns Asia Pacific Breweries, voted Friday to approve the sale of the rewiring unit to Heinlein for a sweetened price of 53 Singapore dollars, or $43. 4, for each share of Asia Pacific Breweries the Dutch company did not already own. The total to be paid by Heinlein is 5. 6 billion Singapore dollars, or $4. 6 billion, and the deal values Asia Pacific Breweries at around $11 billion. An important factor causing the underperformed (last 6 months) relative to the market is Whininess’s Emerging Markets exposure. Growth is weakening across Emerging markets. Last year, with the lull acquisition of Asia Pacific Breweries, Heinlein significantly increased their ME exposure.
Currently 10-15% of Sales coming from Asia Pacific, 10-15% from Mid- America (Mexico) and 15-20% from Central Eastern Europe. In the short term this exposure has put some downside pressure on the share price, however it will probably be an important factor in Whininess’s upside potential in the long run. For example, Mexico GAP growth in 2013 is 0. 9%, while growth is expected to rebound to 3. 5-4. 5% in coming years. Beer volume in Emerging Markets (64%) is currently higher than volumes in Developed Markets (36%), which has been 50-50 in 2007.
In my belief the current ME weakness offers a perfect buying opportunity of long term winners. As the takeover of APP caused a relatively big investment and debt obligation the company has started a cost saving programmer which will lead to expected cost savings of EURO 525 ml over 20120-2014. This could lead to future margin expansion as it will lead to a more cost-efficient organization beer industry APP acquisition By Shearers
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