Billionaire Charoen Sirivadhanabhakdi, Thailand’s third-richest tycoon with a net worth of $10.6 billion, is in the midst of a slugfest, yet again. Fraser & Neave ’s (F&N) local partner in its beer joint venture in Myanmar has begun arbitration for what it claims is its “contractual right” to buy over the parent company’s 55% stake in Myanmar Brewery.
Charoen is no stranger to corporate battles. Over the last year, he has been at odds with Dutch beer giant Heineken, locked horns with Indonesian tycoon Stephen Riady, outmaneuvered Japanese beer maker Kirin in a bid to acquire Singapore’s beverage-to-buildings conglomerate F&N. For more than 6 months, he kept newshounds on their toes and grabbed plenty of headlines as he wrangled a 90.3% stake in F&N–a trophy acquisition in Asia’s dynamic growth market– for $11.2 billion early this year.
Charoen, however, now finds himself in uncharted waters. He is the defender, instead of the attacker. And the challenger–Myanmar Economic Holding Limited (MEHL)–is an unlikely foe! As a government-owned enterprise, MEHL has a 45% stake in Myanmar Brewery, and it now wants full control over the local brewer by acquiring F&N’s 55% stake. The battle will likely be fought in Singapore’s international arbitration court.
MEHL’s spokesperson is emphatic that there is nothing “political” about the move to take on F&N. He said the case is not about how foreign investors are treated in Myanmar. Neither is it about investment laws in Myanmar. (Since Myanmar Brewery is incorporated in its namesake country, any dispute between the owners will be governed by the laws there). Rather, it’s MEHL’s contention that this about the corporate practice of allowing feuding parties in a dispute to be able to exercise their contractual rights. It will strengthen investor confidence.
Myanmar Brewery is the country’s biggest beer supplier and also its top taxpayer. Its Myanmar Beer and Andaman Gold brands have 83% market share in the local market, which is among the fastest growing in the region. The government is, quite naturally, seeking to protect its interests in a prized asset. In contesting this case, Charoen is for the first time pitted against the machinery of the state, rather than another corporate entity.
However, the tycoon is unlikely to throw in the towel easily. His Thai Beverage , has in the past talked of a greater presence in Myanmar and also of importing Myanmar beer into Thailand, where many migrants from Myanmar now live. F&N has sent an official rejoinder to the notice sent by MEHL last week and has reiterated that the arbitration case has no legs to stand on. It is also vehemently opposing the valuation of F&N’s 55% stake at $246 million that works out to be 12 times earnings.
The case will be closely watched by investors in Singapore and elsewhere. It’s the first major dispute involving a foreign investor in Myanmar at a time when not just Singapore companies but international corporations, like Coca-Cola KO -0.55% and Unilever, are flocking to the resource-rich nation. If F&N loses, it will certainly impact the group’s bottom line.