F&N, MEHL differ over fair value for Myanmar Brewery

A Myanmar Beer truck driving along a road in Yangon, Myanmar.
A Myanmar Beer truck driving along a road in Yangon, Myanmar. PHOTO: BLOOMBERG

SINGAPORE - A lengthy dispute between the two stakeholders in Myanmar Brewery (MBL) is set to go on even longer with the parties in conflict over the amount to be paid for Fraser & Neave (F&N)'s stake in the firm.

An independent valuer had said on Tuesday that the fair value of F&N's holding is estimated to be 500 billion kyat (S$586 million). The valuer's report was welcomed by the other stakeholder, Myanma Economic Holdings (MEHL).

But MEHL said yesterday that it disagrees with F&N's position that the sale should take place in United States dollars according to the 2013 exchange rate.

F&N estimates this to be US$560 million (S$765 million).

"MEHL stands ready and willing to conclude the sale and purchase of F&N's stake in MBL at 500 billion kyat within the 30-day period ordered by the arbitral tribunal," MEHL director Nay Wynn said.

MEHL had started legal proceedings against F&N after Thai tycoon Charoen Sirivadhanabhakdi won control of the drinks-and-property conglomerate in a US$11 billion deal in 2013.

A court ruled that MEHL, which holds a 45 per cent stake in MBL, is entitled to buy F&N's 55 per cent share, after MEHL argued that its partner breached obligations under the joint-venture agreement.

An arbitral tribunal was appointed to settle the dispute after F&N rejected MEHL's offer of US$246 million for the stake.

The tribunal concluded that MEHL's offer was not fair

and ordered that the sale take place at a fair value to be determined by an independent valuer agreed to by both sides.

Mr Huang Hong Peng, chief executive of F&N's beer division, said the independent valuation represented a significant premium to MEHL's original offer and "validates our assessment of the strategic attractiveness" of Myanmar Brewery.

Mr Huang cited the firm's "leading position in the Myanmar beer market, the strength of its iconic Myanmar Beer brand and distribution network, and its ability to capitalise on future growth potential".

While the latest valuation of 500 billion kyat differs from the one carried out in 2013, MEHL noted that the 2013 valuation was undertaken by a third party in accordance with the provisions in the joint-venture agreement and was also affirmed by an independent international accounting firm.

Losing the Myanmar Brewery stake would deprive F&N of a significant growth driver and its only alcohol product as it sold its stake in Tiger Beer-maker Asia Pacific Breweries in 2012.