ThaiBev Makes An Offer For F&N To Counter The Dutch

on Sep 14, 2012

Thai Beverage (SGX:Y92) has made an attempt on Fraser and Neave (FNEVF), the Financial Times reported on September 13. The move reflects the company’s is ambition to expand its brewing operations beyond its home market. Other theories suggest that the move is designed to counter Heineken’s efforts to expand on the Asian market by acquiring Asia Pacific Breweries (SGX:A46), the maker of Tiger beer.

According to the Dealogic, if Thai’s offer of S$8.8 billion ($7.1 billion) is accepted, it would be the third-largest cross-border deal on record in Asia outside Japan, the Financial Times says. The other two were the acquisition of AMP’s Asian operation by French insurer Axa in 2010 and Vodafone’s acquisition of Hutchison Essar in 2007.
!m[](/uploads/story/368/thumbs/pic1_inline.png)Thai Beverage, which is controlled by billionaire Charoen Sirivadhanabhakdi, has recently become the largest shareholder in F&N, strengthening its position in the battle with Heineken (HEIA) over Asia Pacific Breweries. F&N and Heineken are joint partners in APB. Recently the Dutch brewer has offered to buy Fraser and Neave’s interests in APB at S$53 per share (S$5.2 billion). Apparently F&N finds these terms acceptable as the company recommended the offer to its shareholders and pledged that 84 percent of the net gain of the sale would go to them. Shareholders will vote on the subject later this month.

However, the bid from the Thailand’s largest brewer could jeopardise Heineken‘s plans. TCC Assets Ltd, a firm controlled by Mr. Charoen, launched an offer on Thursday, September 13, to buy F&N at S$8.88 per share. According to the Financial Times, the offer is backed by loans from Singapore banks DBS Group Holdings Ltd and United Overseas Bank Ltd. Morgan Stanley (NYSE:MS) will also take part in the funding.

The offer came as a result of Thai’s stake in F&N exceeding 30 percent. According to the Singapore-listing rules, in a situation like this a bidder must make a mandatory bid for the company.
Analysts say that Mr. Charoen, who is the third-richest man in Thailand, believes that the potential acquisition of Fraser and Neave would be beneficial to his business in more ways than one. F&N also owns property in Singapore and in other attractive locations around the world, such as London, Paris, Dubai and Seoul, that would compliment Charoen’s own property interests, which include a hotel in New York.

Also, if his counter move against Heineken’s efforts to take control of APB succeeds, it would allow for Thai Beverage to add the Tiger beer brand, which is seen as a premium product to the mass-market Chang Beer that Thai produces and sells in Thailand. The potential acquisition of APB by Charoen would do further damage to the Dutch brewer, which relies on APB’s distribution network for reaching the majority of markets in South Asia.
With that much at stake, it’s understandable that Thai Beverage will push for the acceptance of their offer. Thapana Sirivadhanabhakdi, CEO of the company said: ““We believe the offer represents an opportunity for F&N shareholders to realise the value of their investment in cash and to make a complete exit from F&N.”