Thais fish for F&N stock with $9.60 bait

SINGAPORE - Banks acting on behalf of Thai tycoon Charoen Sirivadhanabhakdi's investment vehicle tried unsuccessfully over the weekend to pick up an additional 10 per cent of Fraser and Neave from institutional shareholders at $9.60 per share, market sources said on tuesday.

That price represents an 8.1 per cent increase over Mr Charoen's current $8.88 per share offer for majority control of F&N, and a 5.7 per cent increase over a rival bid of $9.08 per share by a consortium led by Overseas Union Enterprise (OUE). Both offers are conditional upon the offerors gaining majority control of F&N.

F&N shares opened at $9.52 yesterday and closed 6 cents, or 0.6 per cent, higher at $9.63.

Representatives for Mr Charoen declined to comment.

Representatives for Citigroup and Religare, the two banks said to be involved in the weekend solicitation, also declined to comment.

Responding to a Bloomberg article headlined "Charoen said to seek additional 10 per cent stake in F&N from funds" on tuesday, TCC Assets Ltd (through which Mr Charoen is making his bid in concert with his listed brewer Thai Beverage Public Co) announced last night that TCC has, "from time to time, been approached by shareholders and/or brokers in relation to potential sales of shares in (F&N)" to TCC.

"Shareholders should, however, note that, unless a formal announcement is made by or on behalf of the offeror, there is no certainty that any transaction would materialise and/or any revision of the offer price would be made," said TCC.

Mr Charoen has until Jan 2 to decide if he wants to extend and raise his current offer.

The tender by OUE, a property developer, will lapse a day later, on Jan 3.

The weekend foray offers some insight into how far Mr Charoen might be willing to go if he were to raise his offer. 

If he had been able to acquire any shares at $9.60 over the weekend, he would have had to revise his offer to match the higher price, according to Singapore takeover law.

One fund manager told BT that the weekend offer was rejected by many institutional players because they felt that any overtures by the Thais should be made in public.

"That's not how you play ball," the fund manager said.

But one M&A lawyer, who declined to be named because of sensitivities in the complex takeover battle for F&N, said offerors were well within their rights to solicit additional shares at a higher price, as long as they disclose and make appropriate revisions to their offer in a timely fashion if any transactions take place.

Bryan Go, an analyst at Philip Securities, said he expected that OUE was also out in the market trying to pick up additional shares.

OUE has gotten an undertaking from Japanese brewer Kirin Holdings, which holds a 14.8 per cent stake in F&N, to accept OUE's offer and to buy F&N's beverage business for $2.7 billion if the OUE offer succeeds.

But acceptances for both offers have essentially been at a standstill as minority shareholders hold out for an escalation in the bidding war.

The Thais are in the lead at the moment, with about a 33.6 per cent F&N stake in hand and an additional 1.07 per cent in acceptances.

OUE's stake is just a touch over the 14.8 per cent committed by Kirin.

"TCC is in a better position," Mr Go said.

"If both never extend the offer price . . . TCC will continue to be the largest shareholder, OUE will get their stake from Kirin, which is 15 per cent, so TCC will still have a bigger say."

"I believe they (OUE) are working on it," Mr Go added.

"But bear in mind if they buy anything above the offer price, they will have to extend that offer price to the minority as well."

Mr Go thought $9.60 per share was in the middle of valuation estimates for F&N, and believed there was a reasonable chance that OUE would be willing to meet that.

"It's still all right," he said.

The current F&N takeover saga has been going on since July, but an end may be in sight.

If no other offeror appears on the market, Jan 21 will be the latest that either bloc can revise its offer, which means that shareholders will know the best bids from both sides by then.

F&N, a property and beverage conglomerate, has appointed JPMorgan as an independent financial adviser to assess the OUE offer. A report by JPMorgan is expected by Thursday.