Indonesia trumps Thailand in battle for F&N

Indonesia trumps Thailand in battle for F&N
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A new bid from Riady-controlled OUE values F&N at more than $10 billion.

By Nick Ferguson | 19 November 2012

Stephen Riady’s Overseas Union Enterprise (OUE), a Singapore-listed property company, has joined the race to win control of Fraser & Neave (F&N) with an offer that trumps the existing bid made by Thai tycoon Charoen Sirivadhanabhakdi.

OUE, which owns the Marina Mandarin hotel in Singapore, said at the end of last week that it would pay S$13.1 billion ($10.7 billion), or S$9.08 a share, for all of F&N. If shareholders approve the deal, OUE will then sell the company’s food and beverages businesses to Kirin for S$2.7 billion.

Kirin, which already holds a 14.8% stake in F&N, has agreed to vote in favour of the OUE offer and, in turn, OUE will back Kirin’s acquisition.

“[F&N’s] property portfolio would be highly complementary to OUE’s existing property portfolio,” said Riady, chairman of OUE and a member of the family that controls Indonesia’s Lippo group. “Combining both will further strengthen OUE as a leading property player in Singapore and expand our footprint in Singapore and regionally.”

Charoen, who has substantial real estate holdings in Thailand, was also interested in F&N’s property portfolio, which he considered undervalued — and his gambit almost played off. Acting through Thai Beverage and other companies, he built big positions in both F&N and Asia Pacific Breweries, a subsidiary that brews Tiger Beer.

He missed out on the beer business, but his 30% stake in F&N put him in a strong position to buy the remaining 70% of the company, for which he offered to pay S$8.88 a share in September. He now faces the option of upping his bid or backing down.

Whatever happens, Charoen now stands to earn a handsome return. He paid roughly S$3.7 billion during the summer for his F&N stake, which is now valued at around S$3.9 billion.

Credit Suisse, Bank of America Merrill Lynch and CIMB are advising the consortium led by OUE.

HSBC and Morgan Stanley advised the Thai group on the deal.


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