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Jonathan Kwok

The Straits Times

Publication Date : 23-01-2013

Market watchers expect Thai tycoon Charoen Sirivadhanabhakdi to gain control of Fraser and Neave (F&N) now that rival bidder Overseas Union Enterprise (OUE) has pulled out of the running.

They also expect him to hang on to the property and drinks businesses, given his interest and past investments in both sectors.

Charoen's path to the F&N prize was virtually assured on Monday when property firm OUE dramatically threw in the towel after the Thais raised their general offer price late last week.

In a sign that the going will now be smooth for Charoen, F&N stock dropped to his offer price of S$9.55 during yesterday's trading session, allowing him to mop up shares on the open market at that level.

The shares closed at S$9.55, a loss of 19 cents on the day.

Charoen has also been buying millions of shares in off-market trades through his investment vehicle TCC Assets.

By Monday night he had raised his stake to 42.5 per cent, after buying 34.58 million shares, or 2.4 per cent, in these so-called "married trades" after markets closed on that day.

This stake excludes valid acceptances to Charoen's offer, which will push his holdings even higher.

He needs to have 50 per cent, including acceptances, by the deadline of Feb 4.

At that point the offer turns unconditional.

"At over 42 per cent, there is a high probability of (Charoen) being able to gain majority control," said DMG & Partners analyst Goh Han Peng.

Nomura analyst Lim Jit Soon is also upbeat about Charoen's chances, saying in a note late on Monday: "With no other competing offer, investors are likely to accept TCC's S$9.55 offer."

The focus now turns to Charoen's plans for F&N. The consensus among analysts is that he will look to keep both its property and drinks businesses, although there could be some restructuring.

The main reason is that these units would fit well into his existing businesses.

The billionaire controls Singapore-listed Thai Beverage, which brews Chang Beer, and Thailand-listed Berli Jucker, which has operations in trading and consumer products.

He also controls unlisted property investor and developer TCC Land. The firm has built condominiums in Thailand and has office buildings in Bangkok and shopping centres in Bangkok and Chiang Mai.

It also owns golf courses in Thailand and hotels in Britain, the United States, Australia and Asia, including the InterContinental Singapore in Middle Road.

After his offer becomes unconditional, Charoen's unlisted conglomerate TCC Group - which holds his various investments - will likely integrate its food and beverage operations with F&N's, said Nomura's Lim.

"In addition, it will also look to leverage F&N's regional and global property franchise."

DMG's Goh said Charoen probably wants F&N's property and food and beverage businesses.

He sees opportunities for ThaiBev and F&N to work together in the food and beverage sector.

"If (ThaiBev) integrates with F&N and has a regional footprint, the franchise will be more valuable," he said.

F&N's property business is "viable and profitable", noted Goh. This means it can stay within the F&N group or be spun out separately.

Charoen gave a hint of his intentions when his TCC Assets issued its offer document for its general offer last September.

TCC Assets said there that it will be business as usual with no plans to make "material changes" to F&N's existing businesses, redeploy assets or axe staff.

But the document said TCC Assets wants to review F&N's operations and evaluate its strategic options.