Fraser and Neave board says Thai offer 'not compelling but fair'

The Fraser and Neave (F&N) board said a Thai takeover offer for the Singapore drinks and property group is “not compelling but fair”.

However, in a circular issued by F&N on Wednesday evening, directors who are shareholders said they did not intend to accept the offer -- putting pressure on the bidders to raise the price.

Companies linked to Thai billionaire Charoen Sirivadhanabhakdi have offered US$7.2 billion ($8.9 billion) to take over all of F&N after it agreed last month to sell its 40% stake in Tiger beer maker Asia Pacific Breweries to Heineken NV.

F&N said the Thai offer of $8.88 per share was at the low end of an estimated sum-of-the-parts valuation of between $8.30 and $11.22.

“The offer price is not compelling but fair, from a financial point of view,” it said.

“Shareholders who want to realise their investments in F&N may wish to consider selling all or a portion of their shares in the open market, or tender their shares in acceptance of the F&N offer.”

“Conversely, shareholders who want to continue investing in F&N may consider retaining all or a portion of their shares,” it said.

F&N directors who are shareholders intend not to accept the offer unless it turns unconditional if the Thais get acceptances that bring their stake to more than 50%, the circular said.

The Charoen-linked companies are collectively F&N's largest shareholder with a 33.5% stake, while Japan's Kirin Holdings Co is the second-biggest with nearly 15%. In the last few weeks, units of British insurer Prudential PLC have pared their F&N stake to about 4.8% from around 7.8%.

F&N said earlier on Wednesday it had rebuffed a $1.4 billion bid for its hospitality and serviced residence business.

Overseas Union Enterprise, a Singapore hotel and property firm backed by Indonesia's Lippo Group, made a bid for the F&N unit, two sources with knowledge of the matter said, declining to be identified because the information is confidential.

“The bid could reinforce the idea that F&N’s assets are not fully appreciated, at least in the offer price,” said Jit Soon Lim, an analyst at Nomura, who has a buy rating and a $10.19 target price on F&N stock.

F&N, which also has soft drinks, dairy and publishing segments, said the hospitality and serviced residence business is an integral part of its property arm. It did not identify the bidder.

Overseas Union Enterprise declined to comment.

Shares of Thai Beverage PCL, controlled by Charoen, closed 5.1% higher on Wednesday after F&N said it had received the bid. F&N shares closed up 0.6% at $8.93.

F&N's property portfolio has attracted the interest of Blackstone Group LP and global property companies, sources have told Reuters, while the beverage business could appeal to potential suitors such as Coca-Cola Co. and Kirin.