Overseas Union Enterprise, part of Lippo Group, said it’s considering options that include a bid for Fraser & Neave shares, posing a threat to Thai billionaire Charoen Sirivadhanabhakdi’s offer for the company. F&N shares climbed to a record.
The announcement came more than a week after OUE Chairman Stephen Riady said it made a $1.1 billion bid for F&N’s serviced-apartment business. Riady said in August the company is seeking acquisitions to almost double its assets to $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, a property affiliate of Indonesia-based Lippo Group, would be a setback for Charoen’s $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 with assets spanning from soft-drinks to property.
OUE is in early talks with Japan’s Kirin Holdings Co., which has a 15% stake in F&N, to be partners for a takeover offer for the Singapore conglomerate, Reuters reported today, citing unidentified people with direct knowledge of the matter. OUE is also talking to other potential partners, according to the report. Jun Sato, a spokesman for Kirin, declined to comment.
PARTIAL BID
“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.”
An independent adviser has found Charoen’s offer “not compelling, though fair,” F&N’s board has said in a letter to shareholders. Charoen’s offer of $8.88 a share is at the low end of the adviser’s estimates that value the company at $8.30 to $11.22 a share, the board said. F&N directors who hold shares currently don’t intend to accept the billionaire’s offer, the board said.
ALL OPTIONS
“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.
T.L. 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.
F&N shares rose 4% to $9.29 at the close in Singapore. Thai Beverage shares jumped 5% to 42 cents, while OUE shares were halted. The current price values F&N at $13.4 billion, according to data compiled by Bloomberg.
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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