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Thailand. Cash-flush ThaiBev itching for big-ticket acquisition deals

It will splurge cash on ASEAN targets.

Armed with its formidable $966 million cash pile, F&B giant Thai Beverage is forecasted to aggressively snap up Southeast Asian companies over the next four years.

According to a report by OCBC, the global beer industry has been awash with news of mergers and acquisitions of late, as more brewers turn to big-ticket deals to boost profitability and drive growth.

Thai Beverage is likely to go down the M&A path as well, particularly in light of the group’s Vision 2020 strategy.

“Following Fraser and Neave’s (FNN) sale of its 55% stake in Myanmar Brewery Limited to Myanma Economic Holdings (MEHL), FNN currently has a total cash of S$966m. We think that if necessary, FNN and Thai Bev partnering each other for potential acquisitions is a conceivable possibility,” said OCBC.

“We expect both entities to expand into their new markets - Myanmar, Vietnam, Indonesia and Philippines, but this would result in varying marketing expenditure as they strive to build brand presence in these countries, thus margins for the segment would be affected in certain quarters,” OCBC added.

In the meantime, ThaiBev will continue developing its core business, with new products being developed and distributed in its regional distribution network.

“We remain positive on the group’s long-term growth plans,” OCBC said.

14 Jan. 2016

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