Carlsberg Malaysia offers US$104m for Carlsberg Singapore

By Trina Tan

17 AUGUST 2009

MALAYSIA – Carlsberg’s Malaysian unit is purchasing the Danish brewer’s Singapore business for US$104.34 million (MYR 370 million) cash. Carlsberg Brewery Malaysia Bhd has entered into a memorandum of understanding (MOU) with parent company Carlsberg Breweries A/S to buy over Carlsberg Singapore Pte Ltd. Carlsberg Singapore, which sells and markets alcoholic beverages, is a unit of Carlsberg Asia Pte Ltd, which in turn is a unit of Carlsberg, the holding company of Carlsberg Malaysia. As Carlsberg is a major shareholder of Carlsberg Malaysia, and certain directors of Carlsberg and Carlsberg Singapore are also directors in Carlsberg Malaysia, the proposed acquisition is deemed as a related party transaction. The MOU is valid for a period of six months from its signed date unless extended in writing by Carlsberg and Carlsberg Malaysia, and includes a 20-year license agreement for the distribution and sales of Carlsberg products in Singapore. In addition, the agreement calls for Carlsberg Singapore to source Carlsberg products solely from the Malaysian operation, instead of other Free Trade Agreement friendly nations in the region. It also provides a profit guarantee for Carlsberg Singapore in 2009 and 2010. The Malaysia unit has informed the Malaysian stock exchange that it hopes to complete the purchase on or before 1 November 2009. According to Carlsberg Malaysia’s managing director Soren Holm Jensen, the proposed acquisition will benefit Carlsberg Malaysia strategically as it is a good business fit. "In addition, the financial rationale for the proposed acquisition is justifiable as there are significant synergies to be realised, the investment is earnings accretive to Carlsberg Malaysia and Carlsberg Malaysia's surplus funds are fully optimised," Jensen said.