WRAPUP 1-Heineken earnings hit overshadows Tiger bid success

* H1 net profit 705 mln euros vs poll consensus 737 mln

euros

* Says full-year net to be same as in 2011

* Temasek sells APB stake to Heineken - sources

* Heineken shares down 2.5 pct, among weakest in Europe

SINGAPORE/BRUSSELS, Aug 22 (Reuters) - Higher input costs

and weak European sales depressed Heineken NV's

earnings in the first six months, overshadowing its promise of a

better second half and a minor success in its battle for control

of Asia's Tiger beer.

The world's third-largest brewer suffered a 4 percent

decline in first-half net profit before one-offs on a

like-for-like basis, against market expectations of growth, hit

by rising production costs, weakness in Europe and investments

in Africa.

Heineken said beer drinking would stay subdued in western

Europe in the second half, underlining its need for scale in

faster-growing markets such as southeast Asia where it is

battling for control of Asia Pacific Breweries (APB).

Heineken raised its stake in APB to about 44.6 percent after

buying shares which sources said were from Singapore's Temasek

Holdings and other shareholders, underlining its resolve to fend

off rival Thai Beverage.

The Dutch company, a co-owner of APB since 1931, is seeking

control of the Singapore-listed company to gain a larger slice

of one of the last beer markets that is still growing rapidly

and is not yet dominated by a global brewing group.

Heineken Chief Executive Jean-Francois van Boxmeer told a

conference call on Wednesday that the Heineken and Tiger brands

had taken off in southeast Asia in the past 15 years.

"This is the most rapidly growing area with the strongest

demographics and strongest economic growth in Asia and we deem

that a strategic interest for us," he said.

Big brewers have sought to boost volumes in emerging markets

and steer developed world drinkers to pricier beer. Heineken is

among the most reliant on the stagnant European market, which

contributed 60 percent of its revenue and 40 percent of

operating profit in the first half.

Heineken's first-half operating earnings fell in both

western and eastern Europe, but grew in other regions. Cold, wet

weather in northern Europe meant far lower sales of

thirst-quenching lager.

Group net profit before one-offs dropped to 705 million

euros, at the bottom of the 703-789 million euro range in a

Reuters poll of eight banks and brokerages, for which the

average was 737 million.

TIGER FIGHT

Heineken shares were 2.5 percent lower at 1010 GMT, making

them among the weakest performers in the FTSEurofirst 300 index

of leading European stocks.

The company pushed into Mexico in 2010 and has now set its

sights on control of markets including Indonesia, Singapore,

Thailand and Vietnam, even if it was only stirred into action by

Thai billionaire Charoen Sirivadhanabhakdi.

Charoen, owner of Heineken rival Thai Beverage,

has in the past month built up a stake of 26.4 percent in Fraser

and Neave (F&N), the Singapore holding company whose

joint venture with Heineken controls APB.

Heineken has bid S$7.94 billion ($6.4 billion) for F&N and

for all of the APB shares held by others. F&N's board has

approved its $53 per share bid, but must win backing from

shareholders, which also include Japan's Kirin.

The Dutch brewer also has to prevent Kindest Place, owned by

Charoen's son-in-law, from building its 8.6 percent stake in APB

to 10 percent, a level that could prevent Heineken from

delisting APB.

By buying Temasek's holding, Heineken has kept it out of the

hands of its Thai rivals.

Buying Temasek's small stake is just another step Heineken

is taking to strengthen its grip on APB and to "prevent the

Thais from throwing another spanner into their plan," said Andy

Sim, an analyst at DBS Vickers in Singapore.

The $53 per share offer announced by Heineken on Friday has

placed the spotlight back onto Charoen, Thailand's

second-richest man, and Kindest Place, which offered to buy

F&N's direct stake of 7.3 percent in APB for S$55 a share.

APB shares were flat at S$53 while F&N shares fell 1 percent

to S$8.27.

($1 = 1.2490 Singapore dollars)

(Additional reporting by Charmian Kok, Eveline Danubrata and

Denny Thomas; Editing by Ryan Woo and David Holmes)

Source: http://news.yahoo.com/4-heineken-buys-stake-tiger-beer-maker-temasek-044036115--sector.html

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