Nov 8, 2012

Singapore - OUE: Nov 15 deadline for decision on F&N offer

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Property group Overseas Union Enterprise (OUE) has vowed to make its intentions clear over possible takeover target Fraser & Neave (F&N) by next Thursday.

OUE said yesterday that it will either announce its firm intention to bid for F&N or rule out such a bid by the deadline.

It made the statement after talks with the Securities Industry Council.

After weeks of high drama, the multi-billion dollar tussle for F&N had taken a fresh twist on October 19, when OUE flagged its possible interest in the conglomerate.

But there has been radio silence from OUE since then, leaving investors with little clarity.

An existing general takeover offer by Thai tycoon Charoen Sirivadhanabhakdi of S$8.88 per share, which values F&N at S$12.8 billion, is due to close today.

But investors faced with the uncertainty of whether to accept Charoen's offer could have more time to weigh up the prospects of a better offer, said observers.

"Mr Charoen will likely extend his offer again, as he hasn't gained control of F&N," said DMG & Partners analyst Goh Han Peng. "Logically, any extension will give him more time to (look out for) the action of the other party."

F&N's stock has been trading above Charoen's S$8.88 offer, with market players betting that an OUE offer will eventually materialise.

Yesterday, F&N jumped in the last hour of trade after OUE called a trading halt. Traders were anticipating news of an official F&N offer at last, only to be greeted with the deadline announcement.

F&N's shares rose six cents to S$9.15 for the day.

In its stock exchange announcement, OUE added that it has appointed Credit Suisse and Merrill Lynch to advise it.

The firm will wait for their recommendations before making a decision on a possible F&N offer.

Charoen's offer had already been extended from October 29 to today.

Goh said that a further extension will give F&N shareholders more time to consider and to see if OUE puts out an offer.

"If there is no offer, they can still accept the Thai offer," he said.

Charoen is the largest shareholder of F&N: his parties own more than 35 per cent. Japanese brewer Kirin Holdings is No. 2, at almost 15 per cent.

OUE also said yesterday that its third-quarter net profit rose 20.5 per cent to S$23.9 million, owing to higher contributions by the hospitality, property investment and property development divisions. Revenue for the three months to September 30 was up 18.2 per cent to S$102 million.

The property investments arm benefited from rental contributions from OUE Bayfront, where occupancy rates had increased year on year, and a one-off penalty rent received in relation to another commercial building.

The hospitality division had a full quarter of contributions from Crowne Plaza Changi Airport, which was acquired in July last year. And the property development arm continued to sell more units at the Twin Peaks condominium project.

Earnings per share were three cents, from two cents a year ago. Net asset value per share was S$3.43 at September 30, from a restated S$3.47 at the end of last year.

Before the trading halt and announcements, OUE's shares gained two cents to S$2.71.

US$ = S$1.22

Jonathan Kwok

Business & Investment Opportunities
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