Billionaire Charoen Sirivadhanabhakdi's Thai Beverage PCL (TBEV.SI) and TCC Assets Ltd said they would vote in favor of the sale of Singapore conglomerate Fraser and Neave's (FRNM.SI) stake in Asia Pacific Breweries Ltd (APBB.SI) to Heineken.

In return, Heineken, the world's third-largest brewer, will not make an offer for shares in F&N.

The deal between the Thais, the largest F&N shareholders with a near 31 percent stake, and the Dutch brewer ended a stand off after two months of competing offers for control of APB.

Heineken, already sharing control of APB through an 81-year-old venture with F&N, now seems set to take full control of the brewer and protect its turf in Asia's fast-growing beer market.

"This is settlement talk, to prevent any further escalation of the fight for F&N or APB, which will cost more for both parties if it goes on," said Goh Han Peng, an analyst at DMG & Partners Securities in Singapore.

"Heineken would henceforth be able to complete consolidating APB. ThaiBev would get the balance of the F&N business and give it to a platform or distribution channel to regional markets in Southeast Asia."

Heineken shares rose as much as 6.4 percent to 45.585 euros, a seven-week high, and were the strongest performers in the FTSEurofirst 300 index .FTEU3 of leading European stocks.

Brokers said Heineken is paying a steep price for a deal with limited synergy benefits or revenue gains, given it is already operating APB's business.

However, likely borrowing costs for Heineken of only about 3 percent and high growth potential means the deal should immediately boost earnings. APB's revenue has risen 49 percent in the past two years.

F&N's board has backed the deal and its shareholders are due to vote on the proposed sale of its 40 percent stake in APB to Heineken at an extraordinary general meeting (EGM) on September 28.

"With ThaiBev's support, there is much certainty that the sale of APB assets will be approved at the EGM," said a source with knowledge of the matter. "But the future of F&N will depend on who will be the ultimate owner of the company."

F&N's other shareholders such as Japan's Kirin Holdings Co Ltd (2503.T) will wait for the "fairness opinion" of an independent financial adviser before they decide whether to sell their stakes to Charoen, another source said, declining to be identified because the details of the matter were confidential.

Kirin is poised to make a near 37 percent gain on its investment in F&N shares, bought from Singapore state investor Temasek Holdings Pvt Ltd TEM.UL for S$6.50 a share in 2010.

The Japanese company previously said it is interested in F&N's food and non-alcoholic drinks business.

NO POACHING, COMPETING

Charoen, Thailand's third-richest man, launched a $7.2 billion offer last week to buy out other F&N shareholders, a move seen at the time as possibly derailing Heineken's $6.3 billion bid to buy out the stakes of F&N and other shareholders in APB.

When F&N's board accepted Heineken's improved offer of S$53 per APB share, the deal included a clause that, for a period of two years after the APB deal is completed, F&N will not make, distribute or sell brewery products and brewery-related products in Singapore, Cambodia, Papua New Guinea and Vietnam.

The Singapore conglomerate also agreed, for a period of one year, not to poach senior employees from APB, which makes several popular brands of beer other than Tiger and operates 30 breweries across 14 countries.

For Heineken's part, it agreed not to make, distribute or sell soft drinks in Singapore, Papua New Guinea, Cambodia and Vietnam for two years.

The Thai billionaire's companies are F&N's largest shareholder with just below 31 percent, followed by Kirin with nearly 15 percent and units of British insurer Prudential PLC (PRU.L) with around 7.8 percent.

Forbes estimates Charoen's wealth at $6.2 billion, while Singapore-based consultancy Wealth-X has a higher estimate of $6.3 billion. Wealth-X also said Charoen's wife has about $1.4 billion of stock and assets in her name.

F&N FUTURE IN QUESTION

Heineken described the deal as a good next step, although it will also need other shareholders to vote in favor.

"It significantly improves our level of certainty that our offer will be accepted," said Heineken spokesman John-Paul Schuirink.

Shareholders may be persuaded to back the Heineken deal by the proposal of F&N's board to use the proceeds to pay out S$4 billion ($3.3 billion) through a capital reduction.

At S$53 per share, Heineken's offer is regarded as generous by many analysts - some 18 times core profits (EBITDA), above the 15.4 times paid by Anheuser-Busch InBev (ABI.BR) to take control of Mexico's Modelo in June.

APB shares were down 0.15 percent at S$53.01 in early trade on Wednesday.

In turn, the path is clear for Charoen to profit from the Heineken payout and expand in property and soft drinks - the main business left in F&N after the sale of its beer interests.

Industry watchers have said the Thais may have needed to pay more than their offer of S$8.88 per share if they were serious about gaining control of F&N.

F&N shares were down 0.9 percent at S$8.89 in early trade on Wednesday after hitting an intraday record of S$9.01 on Tuesday.

Shares in F&N had jumped about 5 percent after Charoen's takeover bid last week.

Aberdeen Asset Management sold its entire 0.39 percent stake in F&N last week, while a Prudential unit sold a total of 2.65 million F&N shares, paring the insurer's stake in F&N to around 7.8 percent from about 8 percent.

The TCC offer, backed by loans from Singapore banks DBS Group Holdings Ltd (DBSM.SI) and United Overseas Bank Ltd (UOBH.SI), will not be formally presented to shareholders for another couple of weeks.

The divestment of F&N's brewing assets and the offer from the Thais could force a full break-up of F&N.

F&N is the leader in the soft drinks markets in Singapore and Malaysia, with a 24.5 percent and 26.9 percent market share, respectively, according to Euromonitor. But F&N's reach in the rest of the region is weak and its Asia-Pacific market share is only 0.3 percent.

F&N's property portfolio, worth more than S$8 billion, has also attracted the interest of Blackstone Group LP (BX.N) and other global property companies, sources have told Reuters, while the beverage business could appeal to potential suitors including Coca-Cola Co (KO.N).

(Additional reporting by Saeed Azhar in Singapore and Juhi Arora in Bangalore; Editing by Gary Hill, John O'Callaghan, Ryan Woo and Anna Willard)

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