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Thai tycoon signals F&N won't be split up

Publication Date : 28-09-2012


Thai tycoon Charoen Sirivadhanabhakdi has indicated that Fraser and Neave (F&N) will not be broken up and sold off if his ambitious takeover plan succeeds.

His investment vehicle TCC Assets told F&N shareholders yesterday that it will be business as usual with no plans to make "material changes" to the existing businesses, redeploy assets or axe staff.

But TCC Assets said it wants to review F&N's operations and evaluate its strategic options, according to an offer document dispatched to investors.

"(TCC Assets) intends to be a long-term strategic shareholder of the company and continues to believe in its long-term prospects," said the document.

The statement could dampen market talk that Charoen will split up F&N after the takeover and sell some businesses to cut debts incurred in the buyout.

"Mr Charoen himself has an established track record as a businessman, building successful businesses of his own," said DMG & Partners analyst Goh Han Peng.

"His track record does not suggest he is an asset trader or asset stripper. So contrary to market expectations of a potential break-up of F&N, I think he is more likely to build on the businesses that F&N has, to seek synergies and collaboration opportunities between Thai Beverage and F&N."

Charoen holds more than 30 per cent of F&N through his vehicles ThaiBev and TCC Assets. He is using TCC Assets to launch his S$8.8 billion offer - or S$8.88 per share - for the rest of F&N.

He needs to obtain enough acceptances to control 50 per cent of the firm before his offer becomes unconditional. If it does not reach that level, shareholders who agreed to sell to him could get their stock returned.

Yesterday's document also said Charoen wants to maintain F&N's listing status but may "re-evaluate" his position if he gets enough acceptances that the company does not meet minimum public float requirements. His offer will close at 5:30pm on October 29. This may be extended if enough shareholders accept for the offer to become unconditional.

ThaiBev and TCC Assets have promised to support the sale of F&N's Asia Pacific Breweries stake to Heineken in today's shareholder vote, so that deal is likely to go ahead. They have also said they will reject a capital reduction scheme by F&N to distribute sales proceeds to its shareholders.

The Thai voting bloc means this proposal will not garner enough votes at today's meeting.

Jonathan Foster, special situations group director at Religare Capital Markets, said this could be a way for Charoen to make shareholders accept his general offer by limiting their options.

However, F&N has said that it will look at other options to distribute proceeds from the APB stake sale to shareholders after the general offer period. This means investors still stand to get some cash even if Charoen's general offer fails.

Nomura analyst Lim Jit Soon said the Thai offer price is not attractive, and TCC Assets will probably need to raise its bid to secure a majority F&N stake.


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