Charoen's rival drops out of race
Thai billionaire almost certain to get Singapore's F&N in record US$11.2-bn deal
Tycoon Charoen Sirivadhanabhakdi is tipped to win the months-long battle for control of Fraser and Neave, Singapore's drinks and property conglomerate, in a deal marked as the top-valued takeover by a Thai business group.
His Indonesian rival, property firm Overseas Union Enterprise (OUE), has pulled out of a rare auction.
The deal, at 13.75 billion Singapore dollars (about US$11.2 billion or Bt344 billion), topped transactions by Thai companies PTT Exploration and Production's US$2 billion for London's Cove Energy, Banpu's US$2 billion for Australia's Centennial Coal, and Charoen Pokphand Group's US$9.4 billion offer for China's Ping An Insurance (still under review by Chinese officials).
The price reflected Charoen's dream to grow his business in Asia at a fast pace, banking on the extensive network of F&N which has a presence in more than 20 countries in Asia Pacific.
Charoen's offer is slightly higher than OUE's - S$13.75 billion against S$13.1 billion (US$11.25 billion against US$10.7 billion). It was reported that F&N's shareholders wanted them to fight it out until the price hit the high side of F&N's value, closer to S$16 billion.
The Thai tycoon apparently scared off his rival, when he raised the bid from S$8.88 to $9.55 to trump Overseas Union Enterprise (OUE)'s $9.08 offer. His final bid injected new expectation in the battle, as it pushed F&N's share price to $9.75 during the day in anticipation that OUE would announce a higher bid. F&N was one of the most active stocks yesterday.
As the market closed, OUE announced that it would not raise its offer, effectively withdrawing from a rare auction called by the Securities Industry Council (SIC) to resolve the extended bidding process.
"In order to secure the more than 50 per cent acceptances for the offer to become unconditional, the offerer would need to significantly increase the offer price to a level which is no longer as attractive to OUE," OUE said in a statement to the Singapore Exchange yesterday.
As the bid price was raised, Charoen's TCC Assets, which is assisting Thai Beverage to take over the Singaporean conglomerate, reported the acquisition of additional shares. On January 19, TCC Assets bought 2.2 million more shares of F&N or 0.15 per cent of total issued shares, at the price of S$9.55. This increased the number of shares owned by Charoen's group to 577.6 million shares or 40.09 per cent.
Under the auction rules set by SIC, a daily bidding process was due to take place from yesterday until one party gave up.
Under Singapore's Code on Takeovers and Mergers, the final time at which Charoen or OUE's offers would be able to be declared unconditional is at 5.30pm on February 4, the 60th day after the date on which the OUE offer document was posted - December 6, 2012.
However, the bidding appears to be over. This contest started with the purchase of a stake of nearly 30 per cent in F&N by Thai Beverage in July, and was followed by TCC Assets - another company of Charoen - making its bid for F&N shares on September 13.
OUE's decision to back off gives Charoen the upper hand as he seeks control of the 130-year-old company to expand in Asia, marking another victory for him over foreign giants.
In 2010, ThaiBev won a battle to take over Serm Suk, the 59-year partner of PepsiCo. In bidding for Asia Pacific Breweries, another profit-making business of F&N, though ThaiBev lost the fight to Heineken, the world's third-largest brewer, it eventually reaped a handsome profit.
OUE is chaired by Stephen Riady, son of Indonesian tycoon Mochtar Riady. OUE, a Singapore-based property company, had enlisted Japanese brewer Kirin Holdings in its November bid. OUE had hoped to get the group's property business, while Kirin wanted the food and beverage unit, under their pact.
Offer: S$13.75 billion (Bt344 billion)
Shares owned: 40.09%