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ThaiBev, Charoen Offers S$9 Billion for Fraser & Neave

Thai Billionaire Bids S$9 Billion for F&N in Hurdle for Heineken
Heineken, which last month offered about $4.4 billion for F&N’s stake in Tiger beer maker Asia Pacific Breweries Ltd., may need to win the Thai billionaire’s backing to buy the brewer. Photographer: Tomohiro Ohsumi/Bloomberg

Thai billionaire Charoen Sirivadhanabhakdi made a S$9 billion ($7.3 billion) bid for the 70 percent of Fraser & Neave Ltd. he does not control, potentially blocking Heineken NV from buying the company’s beer business.

TCC Assets Ltd., linked to Charoen’s Thai Beverage Pcl, offered S$8.88 a share for F&N, TCC said in a filing today. The bid is 4.3 percent more than F&N’s closing price yesterday and values the company at $10.3 billion.

Charoen, 68, set off a scramble for F&N and its assets when he agreed to buy a stake in the company in July. Heineken countered with a bid for F&N’s 40 percent stake in Tiger beer maker Asia Pacific Breweries Ltd. which the Dutch brewer already partially owns. Charoen’s latest bid is ahead of a Sept. 28 meeting where F&N shareholders will vote on Heineken’s proposal.

“The fact that they are making an offer at this stage seems to suggest that they want a bigger say in the vote,” said Goh Han Peng, analyst at DMG & Partners Research Pte in Singapore. “They could scuttle the deal if they want to hold on to APB.”

Fraser & Neave shares rose as much as 5.1 percent to S$8.94, after a trading halt was removed at 2:30 p.m. local time, topping the offer price in a sign some investors expect other bids.

“One drastic alternative if Heineken doesn’t want to work with Thai Bev is to make a counter offer for F&N either by themselves or with a partner,” said Goh.

Thai Bev shares added as much as 4.4 percent. Heineken shares fell 77 cents, or 1.8 percent, to 42.19 euros at 9:02 a.m. in Amsterdam.

Thai Influence

Charoen’s bid is the largest announced by a Thai company in at least 10 years, according to data compiled by Bloomberg.

Purchasing F&N would widen his influence in Asia. His brewer, which is F&N’s largest shareholder with a 29 percent stake, got almost all its revenue from Thailand in 2011, according to data compiled by Bloomberg.

Charoen could also want to break up the 129-year-old conglomerate, which has soft-drink and real-estate businesses, according to Justin Harper, Singapore-based market strategist at IG Markets.

“We still think Thai Bev is more interested in the alcoholic business of F&N of which APB is the jewel in the crown,” he said in an e-mail. “It would hate to see Heineken gain control of this.”

Japan’s Kirin Holdings Co., which has a 15 percent stake in F&N, has said it is interested in its soft-drink and food businesses. Coca-Cola Co. has explored a bid for the drinks operations, people with knowledge of the matter have said. Kirin spokesman Jun Sato and Coca-Cola spokeswoman Joanna Price declined to comment today.

Fraser & Neave got 30 percent of its 2011 revenue of S$6.3 billion from property, 12 percent from soft drinks and 17 percent from dairies, according to data compiled by Bloomberg. Charoen’s unlisted business TCC Group has a real-estate unit. The Singapore company will appoint a financial adviser and hold the Sept. 28 meeting as planned, it said in a statement.

European Brewer

Heineken in August raised its offer for APB to S$53 a share from S$50. The higher $4.4 billion bid followed an offer from a company controlled by Charoen’s son-in-law to buy a 7.3 percent stake in the Tiger beer maker for S$55 a share.

Fraser & Neave’s board didn’t accept the Charoen-linked offer and instead recommended Heineken’s bid. It would have to pay a S$56 million fee to break up the agreement with the Dutch brewer. Kindest Place Groups Ltd., controlled by Charoen’s son-in-law, has an 8.6 percent stake in APB, according to data compiled by Bloomberg.

The Dutch company, which owns at least 42 percent of APB, has sought full control to protect its hold over a key emerging-markets business.

APB has rights to brew Bintang beer in Indonesia, Anchor in China, Southeast Asia and Sri Lanka, and Heineken from China to New Zealand. Heineken has the smallest emerging-markets presence of the world’s big three brewers, according to data compiled by Bloomberg.

The world’s third-biggest brewer will review Thai Beverage’s statement and comment when appropriate, Heineken spokesman John Clarke said in an e-mail.

Thai Beverage is offering to pay 13.9 times F&N’s earnings before interest, taxes, depreciation and amortization. That compares with the 14.2 times median in eight global beverage deals of at least $1 billion in the last three years, according to the data.

United Overseas Bank Ltd., DBS Bank Ltd. and Morgan Stanley Asia (Singapore) Pte. are advising TCC. Vichate Tantiwanich, a senior vice president at Thai Bev, didn’t answer two calls to his mobile phone.

Charoen 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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