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Market rife with talk of ThaiBev taking over F&N

Publication Date : 11-09-2012


Another well-known Singapore brand could fall into foreign hands if a much talked about move by Thai Beverage takes off. The Bangkok- based, Singapore-listed company is said to be lining up a loan of up to S$9 billion (US$7.28 billion) to launch an audacious bid to take over Fraser & Neave.

This is the latest twist in the takeover saga, which ThaiBev sparked off in July when it acquired a 22 per cent stake in F&N from OCBC Bank, its subsidiary Great Eastern Holdings and privately owned Lee Rubber, whose Lee family founded OCBC.

This jolted Dutch brewer Heineken into making a grab for F&N's breweries unit, Asia Pacific Breweries (APB), maker of another Singapore iconic brand - Tiger Beer.

But yesterday, the stock market action was firmly on F&N. Its shares shot up on speculation of an imminent general offer by ThaiBev.

The stock jumped 17 cents, or 2 per cent, to S$8.55 - its highest level in almost a month - as investors piled in, keen not to miss out on the action in Singapore's most compelling corporate story.

ThaiBev, which has since raised its F&N stake to 29 per cent, has asked Singapore, Malaysian and Japanese banks to submit financing proposals for a bridge loan, said Basis Point, a Reuters publication, citing banking sources.

The firm had earlier taken out a bridge loan of S$2.8 billion to buy its F&N stake. ThaiBev, controlled by billionaire Charoen Sirivadhanabhakdi, has paid as much as S$8.88 for F&N shares. Under Singapore law, it would need to pay at least this amount in a general offer.

If the bid comes through, foreign owners could take over one of Singapore's most well-established blue-chip companies with interests ranging from soft drinks to property and bookstores.

The F&N board has accepted Heineken's S$53 per share offer - or S$5.4 billion - for its APB stake and is now looking to win shareholder approval for the deal on September 28.

But that voting could be thrown into disarray if ThaiBev makes a general offer for the rest of F&N before that.

"Shareholders may take some convincing to ditch the current offer from Dutch brewing giant Heineken which needs no such loan and has been fairly upfront in its intentions," said Jason Hughes, head of premium client management at IG Markets Singapore.

ThaiBev has offered little by way of public comment since it started investing in F&N while another company linked to Charoen bought a direct stake in APB. The move agitated Heineken into seeking full control of APB.

ThaiBev declined to comment yesterday. Its market value was S$8.7 billion yesterday, less than F&N's S$12.2 billion, leading observers to question if it would be able to convince banks of a loan to gulp down a bigger fish.

A general offer will stretch ThaiBev's resources, said DMG & Partners analyst Goh Han Peng. "But they could pledge their F&N shares as collateral for this loan. They may also do equity fund raising further down the road."

Another question is whether ThaiBev plans on voting in favour of Heineken's bid for F&N's stake in APB.

Goh said "the possibility is there that ThaiBev may do a full takeover of F&N, if they want to block the APB deal". But other analysts raised the possible scenario of ThaiBev agreeing to the APB sale. The firm would then receive a large sum as F&N has promised to pass much of the proceeds to its shareholders.


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