ThaiBev stake in F&N edging close takeover threshold

Aside from triggering a tender offer, this raises the question of whether ThaiBev and its majority owner, Charoen Sirivadhanab-hakdi, are financially prepared to throw additional billions into F&N – the food and drink conglomerate that also holds a sizeable stake what is seen as the jewel in the crown, Asia Pacific Breweries.
ThaiBev yesterday completed its acquisition of a 22-per-cent stake in F&N, worth 2.8 billion Singaporean dollars (Bt70.6 billion). Additional purchases, including 29.5 million shares bought on August 8, mean its stake has now reached 26 per cent.
Singapore’s takeover guidelines require the buyer of a 30-per-cent stake to bid for the rest of the company in a so-called open offer.
Kitti Chambundabongse, marketing expert and chairman of Thai advertising agency Spa-Hakuhodo, yesterday said use of a merger and acquisition (M&A) strategy had become more prevalent among cash-rich corporations such as ThaiBev.
“I’m not surprised because these companies have brands with potential to grow in Asia-Pacific, and therefore M&A is one business model they can implement and pursue. Having a majority [in a company] helps control the business direction. The Asean Economic Community [which comes into effect in 2015] has prompted many companies to change growth strategy to become more competitive in their expansion plan,” he said.
However, a source from Thailand’s alcoholic beverage industry has called the F&N stake battle between ThaiBev and Dutch brewing giant Heineken merely a “financial deal” played out by two millionaires set to make a huge profit from speculation.
“F&N owns significant stakes in Asia Pacific Brewery [APB], which has a regional distribution network for many beer brands, including Tiger and Heineken. However, for other beer rivals in the market place, including in Thailand, their performance is not frightening. There are many options for marketing and distribution channels available in the market, so why F&N and APB?” said the source.
If he is right, then ThaiBev’s purchase is just aimed at forcing Heineken, another bidder for APB, to raise its price so that the Thai company can profit further from its holdings.
Still, last week, a source from ThaiBev insisted that the purchases were genuinely aimed at expanding its regional presence.
Charoen’s company is buying F&N shares as his family is in the middle of a tussle with Heineken over APB, which is a 71-year-old joint venture between F&N and Heineken.
The Dutch brewer last month offered to buy F&N’s 40-per-cent stake in Tiger Beer, while Charoen’s son-in-law Chotiphat Bijananda said last week he would purchase F&N’s 7.3-per-cent direct holding in APB at a price that is 10 per cent higher than Heineken’s bid.
The share purchases in F&N could strengthen ThaiBev’s position to oppose Heineken’s bid if it wanted to do, Hugh Young, Singapore-based managing director at Aberdeen Asset Management Asia – which owns about 1 per cent in F&N – told Bloomberg.
“I don’t know what’s in their minds, but it doesn’t sound like they’re supporting the Heineken offer, put it that way. They have surprised most people so far,” he said.