Overseas Union Enterprise, part of Lippo Group, said it’s considering options that include a bid for shares of Fraser & Neave, posing a threat to Thai billionaire Charoen Sirivadhanabhakdi’s offer for the company.
The announcement today came more than a week after OUE Chairman Stephen Riady said it made a US$1.1 billion ($1.3 billion) bid for Fraser & Neave’s serviced apartment business. Riady said in August the company is seeking acquisitions to almost double its assets to US$10 billion in as early as three years.
“It certainly looks like we could be heading for a bidding war,” said Jason Hughes, head of premium client management at IG Markets in Singapore. “The value put forward by TCC is significantly missing the mark. OUE is probably looking at F&N’s properties and the potential synergies they can derive.”
A bid from OUE would be a setback for Charoen’s US$7.3 billion offer to buy F&N as he seeks to expand his Thai real- estate and beverage businesses in Asia. The billionaire agreed to buy a stake in F&N in July, setting off a fight for the 129- year-old conglomerate and assets spanning from soft-drinks to property.
“The fact is that OUE can’t do a partial bid for the assets given the takeover bid out there now,” said Goh Han Peng, analyst at DMG & Partners Research Pte in Singapore. “So OUE is looking at it with other parties because food and beverage is sought after by F&B players, so if they can tie up for a joint offer, and it could be a complimentary approach.”
‘NOT COMPELLING’
An independent adviser has found Charoen’s offer “not compelling, though fair,” F&N’s board has said in a letter to shareholders.
F&N directors who hold shares currently don’t intend to accept the billionaire’s offer, the board said.
“OUE wishes to state that it is in discussions with certain parties and is considering all options with respect to F&N, including an offer for F&N shares,” OUE said in a statement to the exchange today.
Teresa Woo, the head of investor relations at OUE, declined to immediately elaborate on the announcement. Jennifer Yu, a spokeswoman for F&N, declined to comment. Vichate Tantiwanich, a spokesman at Charoen’s Thai Beverage Pcl, also declined to comment after being reached on his mobile phone.
‘ENTRENCHED POSITION’
Charoen’s bid “is being threatened but it has an entrenched position” with about a third of the company, Goh said. “Whoever comes in needs to make a very attractive bid. The offer would have to be significantly more attractive to entice other shareholders to part with their shares. So he still has the first mover advantage.”
Charoen’s unlisted business TCC Group has a real estate unit. Thai Beverage, which sells the Chang brand of beer, gets almost all its revenue from its home market.
Charoen, 68, was born and raised in Bangkok’s Chinatown district. He bid for the rights to operate distilleries during a liberalization of the nation’s liquor industry, before expanding into beer, alcohol, sugar, and packaging businesses.
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