Nov 9, 2012

Singapore - Tycoon extends F&N deadline again

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Thai tycoon Charoen Sirivadhanabhakdi has again extended the deadline for his takeover offer for Fraser & Neave (F&N), presumably due to low acceptances and a possible counter-bid from a Singapore property firm.

The offer of S$8.88 a share was to have closed yesterday - itself an extension from the original October 29 deadline - but will now run until November 22.

The announcement of the new deadline comes just a day after potential rival Overseas Union Enterprise (OUE) promised to make its intentions clear over F&N by November 15.

OUE, which flagged its interest in F&N last month, will either announce a firm intention to bid or rule one out by this date.

Charoen's extension - which was announced by his investment vehicle TCC Assets - now places the close of his offer one week after the deadline for the OUE decision.

"The extension is good for shareholders as they can wait for OUE's decision on November 15 before deciding whether to accept Mr Charoen's offer," said DMG & Partners analyst Goh Han Peng.

The extension is also logical for Charoen, who is unlikely to be satisfied with his F&N holdings.

His vehicles - TCC Assets and Chang Beer brewer Thai Beverage - have almost 34 per cent of the conglomerate.

This comes from the initial purchase of stock from OCBC Bank, Great Eastern Holdings and Lee Rubber Company in July, plus further buying from large investors and on the open market.

TCC Assets said last night that it has received acceptances from shareholders owning an additional 2.77 per cent of F&N.

This could bring the stake to over 36 per cent if these transfers go through.

The acceptance figure has not risen much in recent weeks as F&N's stock price has shot up above Charoen's S$8.88 per share bid on anticipation that OUE would make a better offer.

F&N stock dropped five cents to S$9.10 yesterday but sellers would still get more money off- loading their shares on the stock market than from selling to Charoen.

Mr Charoen cannot buy any stock at above S$8.88 without raising his entire general offer.

DMG's Goh noted that Charoen's offer is also at the lower end of the valuation range of independent financial advisers hired by F&N.

"In the meantime, TCC Assets is playing its cards right by extending the offer period to November 22 and awaiting OUE's decision before making its next move."

If OUE does not make a bid, TCC Assets may be able to buy more time to garner additional acceptances or buy from the open market if the price declines, noted Goh.

The general offer for F&N was launched on September 13 after ThaiBev and TCC Assets raised their combined stake in the firm above 30 per cent.

But a spanner was thrown into the works last month when OUE said it is in talks with some parties and "considering all options" regarding F&N, including a bid for its shares.

In the meantime, F&N shareholders agreed on September 28 to sell the conglomerate's stake in Tiger Beer brewer Asia Pacific Breweries (APB) to Heineken.

Charoen had initially looked like he might battle Heineken for APB, but decided before the shareholders' meeting to step aside and back the sale of F&N's stake in APB.

This leaves him fighting for control of the rest of F&N, which has operations in property, soft drinks, dairies, and printing and publishing.

F&N also retains a stake in a Myanmar beer company, separate from the offloaded APB holdings.

Jonathan Kwok

Business & Investment Opportunities
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