ThaiBev spin-off pinpoints dedicated beer group growth

May 18, 2022 | 10:00
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Thai Beverage Public Company, known as ThaiBev, has announced its intention for BeerCo – which comprises ThaiBev’s brewing operations in Thailand and Vietnam – to resume its plan of a proposed spin-off offering of its brewery unit in Singapore and thus kicking off its restructuring.
ThaiBev spin-off pinpoints dedicated beer group growth
ThaiBev spin-off pinpoints dedicated beer group growth, Source: ThaiBev

International Beverage Holdings Ltd., a wholly-owned subsidiary of ThaiBev Group which holds all of the issued ordinary shares of BeerCo, will conduct a public offering of up to approximately 20 per cent of the total number of issued ordinary shares of BeerCo.

Controlled by tycoon Charoen Sirivadhanabhakdi, ThaiBev is one of Southeast Asia’s largest drinks makers. It initially paused the plan to go public last year due to the pandemic.

BeerCo is a company incorporated in Singapore as an investment holding company. An internal restructuring exercise within ThaiBev Group was undertaken and completed in 2020 to substantially streamline and consolidate the group’s beer business and operations under BeerCo, except for the sale of Thai beer products outside Thailand.

BeerCo’s business includes the production, distribution, and sales of beer, including popular products Chang, Archa, and Federbräu in Thailand. Via Saigon Beer-Alcohol-Beverage Corporation (SABECO), it also produces, distributes, and sells Bia Saigon and 333 in Vietnam. BeerCo has a total of three breweries in Thailand and a network of 26 breweries in Vietnam.

In 2017, ThaiBev, acquired 53.59 per cent of SABECO, spending a reported $4.78 billion on the deal.

Through a restructure, ThaiBev said the potential can be better developed with a dedicated board of directors and management team focused solely on growing the beer business. The management team for BeerCo will comprise members with extensive experience in the beer industry and will be led by a board of directors which will contribute to the growth and strategy.

BeerCo, as a separately-listed entity, will have direct access to debt and equity capital markets and be able to independently leverage a wider range of funding options to finance its existing operations as well as its future business expansion plans.

A reduction of ThaiBev’s interest-bearing debt to equity ratio and its overall debt level will be beneficial to the group as a whole, it says, strengthening it financially and increasing its ability to invest in future business expansion. ThaiBev will also be able to better utilise its financial resources for its other business segments.

At the end of September 2021, revenues of BeerCo were approximately S$4.2 billion ($3 billion), and profit after tax was approximately S$342.5 million ($245.2 million).

The closure of entertainment venues and the ban on alcoholic beverage sales in restaurants in Thailand, as well as the more stringent lockdown measures in Vietnam, resulted in beer sales revenue decreasing by 7.2 per cent on-year to 99.1 billion Thai baht ($2.85 billion) in 2021 and net profit decreasing to 3.12 billion Thai baht ($89.8 million).

The total sales volume, including through SABECO, decreased 11.1 per cent year on year, while the total sales volume excluding SABECO decreased 4.4 per cent on-year.

In 2019 and 2020, there were rumours that ThaiBev intended to sell SABECO only two years after acquiring it. However, a representative denied the move and said the group was committed to comprehensively developing its core business in Vietnam, especially with SABECO.

By Nguyen Thu

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