Thais set to win F&N battle after Overseas Union bows out

Thais set to win F&N battle after Overseas Union bows out

The group led by Stephen Riady's Overseas Union Enterprise Ltd (OVES.SI) threw in the towel on Monday after Thailand's TCC Assets Ltd, headed by billionaire Charoen Sirivadhanabhakdi, raised its takeover offer for F&N (FRNM.SI). At stake is F&N's real estate portfolio worth more than $8 billion and soft drinks, dairy and publishing businesses.

Charoen currently owns 42.5 per cent of F&N, held through TCC Assets and Thai Beverage PCL (TBEV.SI). His S$9.55-a-share offer last week for F&N stock that he does not already own values the Singapore conglomerate at around $13.75 billion. F&N shareholders have until early next month to accept or reject the offer.

"Once its offer becomes unconditional, we are likely to see TCC move to integrate its F&B (food and beverage) operations with F&N's. In addition, it will also look to leverage F&N's regional and global property franchise," said Jit Soon Lim, Nomura's head of equity research for Southeast Asia.

Lim added that Charoen may sell F&N's printing and publishing business, which he estimated to be worth around $320 million.

Charoen's interest in F&N's assets was first made public when his companies became F&N shareholders in July last year and sought to purchase F&N's stake in Tiger Beer maker Asia Pacific Breweries Ltd. But he lost that battle when F&N sold the stake to Dutch brewing giant Heineken NV (HEIN.AS) for $5.6 billion in September.

The self-made billionaire, who is a son of a Bangkok street vendor, quickly followed up with a $8.88-a-share offer for the rest of F&N, with the Singapore group still deemed an attractive asset.

F&N is the leader in the soft drinks markets in Malaysia and Singapore, with a 31.3 per cent and 21.4 per cent market share, respectively, according to research firm Euromonitor. It also has a 55 per cent stake in Myanmar Brewery Ltd, a joint venture that produces Myanmar Beer, the Southeast Asian country's best-selling beer.

Analysts say Charoen is likely to tap F&N's network in Singapore and Malaysia to distribute Chang Beer, brewed by Thai Beverage, as well as spirits, energy drinks and instant coffee. In Thailand, where he already has an edge, Charoen may in turn market F&N's brands.

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