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SIC to hold rare 'open auction' for F&N

Publication Date : 16-01-2013

 

An extremely rare open auction could settle a protracted stand-off between rival bidders for conglomerate Fraser and Neave (F&N) - a stalemate some have called "farcical".

Last night, the Securities Industry Council (SIC) stepped in to provide this framework - not seen in recent Singapore corporate history - to close the curtain on the epic battle for F&N.

Rival bidders, Thai tycoon Charoen Sirivadhanabhakdi and property firm Overseas Union Enterprise (OUE) will start the auction process on January 21, if there is still a stalemate over F&N.

On that day, either bidder, or both, may announce a raised offer. The new offer must be higher than their existing bid by at least one cent, and the offers must remain only cash. This means that no other alternatives like payment via shares is allowed.

An offerer will be allowed to unveil another higher offer on the next day - January 22 - if the other bidder has raised its bid on January 21. The process follows, with higher and higher bids on each subsequent day, until neither party raises its offer again. That will be the end of the auction.

The F&N battle began last July when Charoen's parties bought stakes in F&N and Asia Pacific Breweries (APB). Dutch brewer Heineken has since gained control of APB, leaving Charoen and OUE to fight it out for F&N.

As things stand, there is a deadlock in the F&N battle.

Existing general offers from Charoen of S$8.88 per share and the OUE consortium of S$9.08 per share have both received low acceptances.

Investors have driven F&N's share price well above that level in expectations of higher bids.

Rather than raising the bids both parties have continued to extend their offers. Yesterday, Charoen extended the deadline of his offer to January 21, the same date that OUE's offer is slated to expire.

The SIC's auction process will continue even during weekends and public holidays. If a party wants to make a revised bid, it must inform the SIC by 4pm on the given day and announce the offer between 5:30pm and 6pm.

After the revised offer, the bidder must issue a revised offer document within seven days. After the last issued offer document in the auction process, the offer will have 14 days to become unconditional - which means, for either party to get enough acceptances to control 50 per cent of F&N.

The auction procedure announced by the SIC, which regulates takeovers and mergers here, is seen as aiming to quickly draw out the best offers Charoen and OUE are willing to table.

"The council considers that (F&N's) shareholders should be provided with certainty to make their investment decisions in respect of the competing offers," said SIC in a statement.

This is the first time an open auction structured by the SIC has happened in Singapore's recent corporate history, said market watchers such as corporate lawyer Robson Lee.

"The SIC probably felt that the situation would be best for shareholders if both bidders were given a chance to put their best offer on the table, to enable shareholders to have the highest possible exit price," he said.

The January 21 deadline came after seven extensions from Charoen and two from OUE. F&N shares gained two cents to S$9.70 yesterday, significantly above both bids on the table.

Charoen launched his F&N general offer last September before an OUE-led group mounted a counter-bid in November.

Throughout, the battle for F&N has seemed more like an endurance test than a heated corporate drama.

Earlier this month, retail investor Denis Distant wrote to The Business Times calling the situation "farcical".

"Both offers are pitched far below the F&N current market price... The offers should be closed without further extensions if the offerors are not prepared to raise their bids to realistic levels," he wrote.

 

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