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Market awaits next move in bid for Singapore’s F&N

January 2, 2013

SINGAPORE: The deadline for a Thai billionaire to make an improved bid for Singapore conglomerate Fraser and Neave (F&N) was due to expire today, with an Indonesian rival waiting in the wings.

TCC Assets, controlled by Thai drinks tycoon Charoen Sirivadhanabhakdi, has until 5.30pm today to make a new offer for F&N, a diversified group with food and beverage, property and publishing operations.

F&N became a takeover target in September after selling off its most prized asset, Tiger Beer maker Asia Pacific Breweries, to Dutch giant Heineken, which beat a rival proposal from Charoen.

TCC Assets made a S$8.7 billion (US$7.12 billion), or S$8.88 a share, bid in September for the F&N shares it does not yet own, but was stymied by property firm Overseas Union Enterprise (OUE), controlled by Indonesia’s Lippo Group.

Lippo’s founder is Indonesian tycoon Mochtar Riady, and his son Stephen is OUE’s executive chairman.

OUE countered TCC’s offer in mid-November by putting S$13.1 billion (US$10.7 billion) on the table, translating to S$9.08 a share.

That offer is backed by Japanese brewer Kirin Holdings, which holds about 14.8% of F&N and is interested in its food and beverage business, with the property interests of F&N going to OUE if the bid succeeds.

TCC was then allowed to make a fresh offer and has since been granted two extensions to the proposal deadline, the latest one expiring on Jan 2.

As of Dec 19, Charoen already owned approximately a third of F&N through TCC Assets and ThaiBev, which he also chairs.

While the deadline moved closer with no word from the Thai billionaire, analysts said that even if TCC Assets does not improve on OUE’s offer, OUE may not automatically win control of F&N.

In a shareholder note issued in December, the F&N board called OUE’s bid “not compelling though fair”, adding that it fell at the lower end of a valuation of S$12.35 billion to S$16.65 billion made by F&N’s adviser JP Morgan Chase.

Jason Hughes, head of premium client management for IG Markets Singapore, said: “Both offers fall well short of what shareholders should be expecting for the drinks and property conglomerate, which has a market value of at least S$14 billion.

“If neither of the rival bidders can raise the stakes, F&N shareholders could reject both offers, which may take some fizz out of the current share price,” Hughes added.

F&N shares were down 0.41% or four US cents to S$9.66 by midday as investors awaited TCC’s move.



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