Charoen’s Fraser & Neave Takeover Was Years in the Making

Thai billionaire Charoen Sirivadhanabhakdi’s $11.2 billion takeover of Singapore’s Fraser & Neave Ltd., clinched after a rival bid was dropped at the last minute, was more than three years in the making.

Charoen debated an investment in the 130-year-old conglomerate as early as mid-2009 as he considered expanding outside Thailand, said four people with knowledge of the matter who asked not to be identified because the talks were private. A decision was put on hold amid doubts that pivotal F&N shareholders, including Oversea-Chinese Banking Corp., would be willing to sell, the people said.

The deal gained momentum again in late 2011, when Charoen learned that F&N was considering a restructuring that might boost its value, said the people. Charoen and representatives including son-in-law Chotipat Bijananda and son Thapana, then persuaded OCBC to sell its 22 percent stake in F&N, setting the stage for the seven-month takeover saga that pitted him against Dutch brewer Heineken NV and a Singapore property tycoon. The transaction closed on Feb. 18.

Charoen’s takeover of F&N, whose businesses range from milk to shopping malls, burnished the reputation of Thailand’s richest man, worth $11.8 billion, according to the Bloomberg Billionaires Index. Charoen, born and raised in Bangkok’s Chinatown district, has seen his wealth swell by $3 billion this year alone -- more than any other Asian billionaire -- as shares of his publicly traded companies rose, data compiled by Bloomberg show.

Stealth Moves

“He’s the man of the moment,” said Goh Han Peng, a Singapore-based analyst at DMG & Partners Securities Pte. “Charoen played his hand very well in the fight for F&N, often leaving the market to guess on his intentions and out-maneuvering the competition through stealth moves.”

Discussions on how to win OCBC’s stake in F&N intensified in mid-2012 with multiple meetings taking place in Charoen’s Bangkok home and at Singapore’s Intercontinental Hotel, the people said.

Charoen’s advisers were concerned that F&N might split its property and beverage businesses, increasing its market value and complicating a stake purchase. They pushed for quick action, according to the people, deciding in May to approach OCBC about its shares at a board meeting of Thai Beverage Pcl, which Charoen also controls.

OCBC Meetings

On June 20 at 2:30 p.m. Chotipat and Thapana met with OCBC Chief Financial Officer Darren Tan at the bank’s Singapore headquarters to give him an offer document, said two people with knowledge of the meeting. A few days later Charoen met Cheong Choong Kong, OCBC’s chairman, Chief Executive Officer Samuel Tsien and Fang Ai Lian, chairman of the bank’s insurance unit, to convince them to sell, this person said.

Somthawin Patanavanich, a spokeswoman for TCC Assets Ltd., Charoen’s company, didn’t answer a call to her office or respond to an e-mail. Koh Ching Ching, a spokeswoman for OCBC, declined to comment on the meeting.

After weeks of talks, OCBC and two affiliates announced on July 18 an agreement to sell their combined 22 percent stake in F&N to ThaiBev for S$2.78 billion ($2.2 billion), or S$8.88 per share -- a 12 percent premium to the previous day’s closing price. An entity linked to Charoen also bought the companies’ shares in Asia Pacific Breweries Ltd., at the time 40 percent owned by F&N.

The battle for F&N revealed quirks in Charoen’s personality, including a penchant for lucky numbers -- the figure 8 is seen as auspicious among Thailand’s Chinese community -- and an attention to detail that went as far as dictating the exact timing of presenting the offer to OCBC, people close to the process said. They described the billionaire as low-key and favoring the same uniform: a white shirt and dress trousers.

Heineken Contest

The APB deal set the billionaire on crossing paths with Heineken, which was seeking control of the maker of Tiger beer. Charoen’s involvement ultimately forced Heineken, the world’s third-biggest brewer, to raise its offer for the rest of APB by 6 percent to S$5.6 billion, a deal that closed in November.

On Sept. 13, Charoen bid S$9 billion for the rest of F&N.

That was countered in November when a group led by Overseas Union Enterprise Ltd., a Singapore-based property company, made a S$9.08 per share offer for F&N, topping the Thai tycoon’s bid. OUE Executive Chairman Stephen Riady is a son of Mochtar Riady, who controls Indonesia’s Lippo Group, with businesses ranging from real estate and financial services to food across Asia. OUE enlisted Kirin Holding Co., the Japanese brewer that held 15 percent of F&N, for its offer.

Bangkok Flight

As F&N shares kept trading above both offers, the deal remained in limbo until January as TCC and OUE repeatedly extended their bids without raising them. The impasse lasted until midnight on Jan. 18, when Charoen boosted his offer to S$9.55 a share and said he bought an additional 6.3 percent of F&N -- just three days before an auction to be directed by the city-state’s financial regulator was scheduled to start.

With a deadline for an OUE counterbid approaching, Charoen advisers flew to Bangkok from Singapore to plot a response, the people said. Only when they landed in the Thai capital did they learn that OUE had refrained from raising its offer, clearing the path for Charoen’s takeover.

Morgan Stanley, DBS Group Holdings Ltd., Malayan Banking Bhd, HSBC Holdings Plc and United Overseas Bank Ltd. worked for Charoen on the deal, while Goldman Sachs Group Inc. and JPMorgan Chase & Co. advised F&N.

“This was undoubtedly one of the most fascinating deals to have worked on given the innumerable complexities,” said David Aronovitch, Morgan Stanley’s co-head of investment banking for Southeast Asia, who was among the firm’s lead bankers on the transaction

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