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All eyes on ThaiBev's next move

Publication Date : 12-09-2012


Corporate observers are studying the latest permutations surrounding Fraser & Neave after news emerged yesterday that the conglomerate could be the subject of a takeover bid.

Thai Beverage, the largest shareholder of F&N with a 29 per cent stake, said early yesterday morning that a party "acting in concert" with it is weighing a bid.

If one materialises, the key question is whether ThaiBev and this other party will stand in the way of the planned $5.4 billion sale of F&N's stake in Asia Pacific Breweries to Heineken.

Public comments from ThaiBev have been few and far between since it and a related company started this saga in July by buying stakes in F&N and APB. Analysts stepped into the information vacuum with speculation yesterday on what might eventuate.


F&N bid will be launched with the aim of blocking APB sale

This scenario centres on ThaiBev or the said party launching an offer for F&N and then working together to try to stop the APB sale.

"A key reason to secure control over F&N at this stage would be to block F&N's sale of its 39.7 per cent stake in APB to Heineken," said DMG & Partners Securities in a note yesterday. This would be a risk as it would antagonise Heineken, which has run APB as a joint venture with F&N since 1931. Heineken has made it clear that it does not want too many beer companies on board at APB.

But DMG noted that "in many ways, F&N offers a solid regional platform for ThaiBev to accelerate its regionalisation strategy in both its brewery and non-brewery businesses".

It added: "Cross-selling opportunities between Thailand and overseas markets in beer and non-alcoholic businesses could create meaningful revenue synergies for the enlarged group."

It also noted F&N's market-leading positions in soft drinks and dairies in Singapore, Malaysia and Thailand, as well as its distribution reach in emerging markets such as Vietnam and Myanmar.

Blocking Heineken's purchase of APB would not be out of character for Charoen Sirivadhanabhakdi, who controls ThaiBev.

The billionaire has consistently shown in the past a "willingness to take risks and face down competitors", said Mykolas Rambus, chief executive of Singapore- based consultancy Wealth-X, according to Reuters.


Bid launched, APB sale allowed

The second scenario sees a general offer launched but with ThaiBev and the said party approving the sale of APB.

Selling the brewery operations could spark the break-up of F&N into its property, soft drinks, dairies and printing and publishing businesses.

A note from CIMB to investors highlighted two possibilities in this case.

In one, the said party acting in concert with ThaiBev would be a property player and so would buy out F&N's property arm while ThaiBev takes the food and beverage arm.

In another possibility highlighted by CIMB, a private Thai vehicle would take out the food and beverage business while a property partner would get F&N's real estate business. ThaiBev would not be affected as it would not be buying any chunks of F&N.


Bid not launched at all

The third scenario would be if ThaiBev's partner does not launch a general offer for the rest of F&N, if financing does not materialise, for example.

After all, ThaiBev's statement yesterday said that "there is no certainty that an offer for F&N will materialise".


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