Under its new Thai owners, conglomerate Fraser and Neave (F&N) is spinning off its real estate arm into another listed company to streamline operations.
Property unit Frasers Centrepoint Limited (FCL) will be listed separately on the Singapore Exchange (SGX) after two FCL shares are given to F&N shareholders for each F&N share held, it said yesterday.
After shedding the property business, F&N will be a drinks company with a smaller printing and publishing business.
FCL will probably end up much larger than F&N as a pure property company with residential developments, and holdings and management contracts in serviced apartments, shopping malls and office buildings.
Thai tycoon Charoen Sirivadhanabhakdi evidently believes splitting the drinks and property businesses is the best way to grow F&N, which he valued at $13.75 billion in his takeover - completed early this year.
But in many ways, it is a return to times past for the firm. The real estate arm used to be listed as Centrepoint Properties but was taken private in 2002 and later renamed Frasers Centrepoint. It has since grown substantially.
Going further back, F&N was started in 1883 as a drinks business. The restructuring will return the firm, whose products include the 100Plus sports drink, back to its roots as a virtually pure-play beverage firm.
"We've always been asked why we are into multiple businesses, why a food and beverage group has such a large property business," said F&N chief financial officer Hui Choon Kit, who led a briefing yesterday alongside top FCL executives. F&N chairman Charoen and other top Thai directors did not attend.
Mr Hui said the split will allow F&N to focus on its food and beverage business. Shareholders will have more flexibility in choosing whether they want to invest in drinks or property, he said.
FCL group chief executive officer Lim Ee Seng said the separate listing of his firm will enhance its profile, and enable it to pursue its growth strategies independently.
When F&N is carved up, the property business' net asset value will be 2.4 times that of the drinks and publishing ones combined.
The move needs the approval of a simple majority at a shareholder meeting. But this is a formality as Mr Charoen's vehicle TCC Assets, with 62 per cent of F&N, said it will back the plan. Thai Beverage, also controlled by Mr Charoen and holding another 29 per cent, did not say how it will vote.
F&N's free float will need to be raised before the listing of FCL. Only 9.7 per cent is held in the public's hands after Mr Charoen's hugely successful general offer.
The proposed proportional distribution means F&N and FCL will both have the same shareholders holding exactly the same percentage each, and FCL needs a public float of at least 12 per cent before it can list under SGX rules.
So F&N needs to raise its free float to at least 12 per cent - either by a placement of new shares, or by the Thais selling some of their shares.
FCL's listing is expected in November or December.
Already, there has been cooperation between F&N and Mr Charoen's other drinks and property businesses. F&N is distributing Oishi products like green tea in Malaysia. Oishi is a food and non- alcoholic drinks unit of ThaiBev.
This is the second major corporate move since Mr Charoen took over F&N. Last month, it paid out $4.73 billion through a capital reduction - or $3.28 per share. The cash was most of the proceeds from F&N selling its Asia Pacific Breweries stake to Heineken.
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