Thai Tycoon Extends F&N Offer Again, but End Game Near

Range of Fraser & Neave Ltd. (F&N) products
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Range of Fraser & Neave Ltd. (F&N) products

Thai billionaire Charoen Sirivadhanabhakdi extended his $7.2 billion offer to take over Singapore property and drinks conglomerate Fraser and Neave (F&N) for the sixth time, until Jan. 15.

Charoen is F&N's largest shareholder with a 34 percent stake, held through Thai Beverage and TCC Assets. The tycoon is trying to increase his stake in F&N to more than 50 percent to foil a rival bid by a group led by Singapore-listed Overseas Union Enterprise.

The Overseas Union group made a S$13.1 billion ($10.7 billion), or S$9.08 per share, counterbid for F&N in November, higher than the Thais' S$8.88 offer in September to acquire F&N shares that they did not already own. The consortium had extended its offer to Jan. 14.

Since the Overseas Union group announced its counterbid, F&N shares have been trading above both offer prices as investors bet that higher bids would emerge. The stock last traded at S$9.69, up around 6 percent since Nov. 15.

But some investors are losing their patience as both camps extend their deadlines without raising their offers.

"You've got to have a realistic price. You can't come out and bid way below the market price and expect people to take it, and keep extending and extending," Denis Distant, a retail investor who holds F&N shares, told Reuters over the phone.

"Whoever is making the rules should not allow this to happen," said Distant, who had retired after almost four decades at a bank.

Jan. 21 could be the D-day for the F&N battle, effectively the final deadline for the two bidders to raise their offers.

F&N's independent financial advisor J.P. Morgan had said both the existing offers from Charoen and the Overseas Union group were "not compelling but fair." The bank's sum-of-the-parts valuation of F&N is S$8.58 to S$11.56 per share.

"However they want to play this game, however they want to cut the cake, the guy with the best price on the table at 5:30 pm on Jan. 21 is going to be the winner," said Jonathan Foster, Singapore-based director of global special situations at Religare Capital Markets.

'Fair but Not Reasonable'

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. The Japanese brewer will offer to buy F&N's food and beverage business for S$2.7 billion if the group's bid is successful.

J.P. Morgan deemed Kirin's offer as "fair but not reasonable," F&N said on Dec. 31. But investors and analysts are calling for more clarity on the verdict.

"In Malaysia and Australia, for example, it would not be possible for an independent expert to opine that an offer is fair but not reasonable, basing their 'not reasonable' decision on the process of sale," Religare's Foster said.

"I think it sets a dangerous precedent, in effect saying that if a company sells itself or a piece of its operations to a shareholder, it must effectively always be not reasonable unless a full open auction process has taken place."

United Overseas Bank, DBS Bank and Morgan Stanley are the financial advisors to the Thais.