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Asian Tycoons Near Final Battle in War for Singapore's F&N

Sunday, 20 Jan 2013 | 10:12 PM ET
A range of F&N's soft drinks
Munshi Ahmed | Bloomberg | Getty Images
A range of F&N's soft drinks

Thailand's third-richest man has raised his stake and takeover offer for Fraser and Neave to fend off a bid by a group led by Indonesian tycoon Stephen Riady as the battle for the Singapore property and drinks group draws towards a close.

Thai billionaire Charoen Sirivadhanabhakdi appears to have the advantage going into a formal auction that begins on Monday to decide the fate of the 130-year-old company, which sold its prized Tiger Beer brand to Heineken for S$5.6 billion ($4.56 billion) last year.

The Thai gambit values F&N at nearly $11.3 billion and puts the pressure on a consortium led by Riady's Singapore-listed property firm Overseas Union Enterprise to counter the offer or withdraw from Southeast Asia's largest-ever corporate acquisition.

"This has extended Charoen's advantage. He has an upper hand over OUE because he's only about 10 percent away from gaining majority control of F&N," said Goh Han Peng, an analyst at DMG & Partners Securities in Singapore.

Monday's auction was triggered because neither bidder had declared a final offer by a deadline on Sunday set by Singapore's Securities Industry Council.

Thailand's TCC Assets, headed by Charoen, raised its offer last week to S$9.55 a share, above the S$9.08 bid by the Overseas Union-led consortium. F&N shares rose 1.4 percent to S$9.71 in early trade on Monday.

Charoen acquired an additional 90.8 million shares, or a 6.3 percent stake in F&N, at S$9.55 each on Friday and another 2.2 million shares on Saturday.

(Read More: Billabong Receives $556 Million Takeover Offer)

The move raised his total stake - held through TCC Assets and Thai Beverage - to 40.6 percent including acceptances. Charoen's previous offer was S$8.88 per share.

The offers by Charoen and the Overseas Union group are conditional on getting more than 50 percent of F&N. If Charoen wins, F&N will have to pay a break fee of up to S$50 million to the Overseas Union group.

Drinks and Property

F&N has a property portfolio worth more than S$8 billion and soft drinks, dairy and publishing businesses. It sold Tiger Beer to Dutch brewing giant Heineken in September.

F&N's independent financial adviser JP Morgan has said its sum-of-the-parts valuation is S$8.58 to S$11.56 per share.

In the auction, each side can revise its offer by a minimum of one Singapore cent per share once a day. The revision must be unconditional and in cash.

The process will continue until neither side revises its offer or the securities watchdog stops the auction.

Forbes says Charoen is worth $6.2 billion. His rival, Riady, is also president of the Lippo group founded by his father Mochtar Riady.

Charoen has extended the deadline of his previous offer seven times and the Overseas Union group twice. The multiple extensions have tested the patience of F&N shareholders.

Kirin Holdings, F&N's second-biggest shareholder with a stake of around 14.8 percent, has given its conditional support to the Overseas Union group.

(Read More: Suntory Set to List Food and Beverage Unit for $6 Billion)

The Japanese brewer will offer to buy F&N's food and beverage business for S$2.7 billion if the Overseas Union group's bid is successful. JP Morgan's valuation of that unit is S$1.88 billion to S$3.82 billion.

If Charoen wins control of F&N, analysts say he is likely to use F&N's distribution network in Singapore and Malaysia to sell his other products and to market F&N brands in Thailand, where he already has an edge.

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FRNM
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HEIA
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OVES
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TBEV
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2503.T
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