October 13, 2017 / 5:23 AM / a year ago

ThaiBev acquires Myanmar distilleries as TPG exits

HONG KONG, Oct 13 (Reuters) - Thai Beverage Public Co has acquired a combined 75 percent stake in two Myanmar distilleries in a deal worth $742 million, hoping to tap into growth in the country’s nascent spirits market.

ThaiBev acquired the 75 percent stake in Myanmar Supply Chain and Services Go (MSCS) and Myanmar Distillery Co (MDC) from four third-party vendors, including Texas-based private equity firm TPG which sold its 50 percent stake in MDC, according to their separate announcements.

The deal gives Singapore-listed ThaiBev access to an expanded distribution network in Myanmar, as the food and beverage conglomerate looks to overseas market for growth after a recent sales dip.

ThaiBev sales in the first nine months of its fiscal year, from October 2016 to June 2017, dropped 6 percent year-on-year to 142 billion baht ($4.3 billion), due to slow economic growth and the observance of a national mourning period.

ThaiBev executives said earlier this month it planned to launch two new spirit products in November and that M&A activities in key markets such as Vietnam, Cambodia and Myanmar were needed.

The two Myanmar companies operate two production facilities in Yangon and Mandalay under the spirits brand Grand Royal, the largest whisky player in the country.

TPG, one of early global investors in the Southeast Asian country after it opened up to foreign investors a few years ago, more than tripled its investment in a sooner-than-expected exit.

TPG’s 50 percent stake in MDC via an investment vehicle was sold for $494.4 million, according to a person with direct knowledge of the deal. The firm bought the stake for $150 million in Dec 2015, the person said.

ThaiBev acquired a five percent direct stake in the two companies and another 70 percent indirect stake held by two investment holding companies, in a combined cash deal of $741.6 million.

The transaction was funded with internal cash and bank financing, ThaiBev said. (Reporting by Kane Wu; Editing by Stephen Coates)

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