Suds and stocks and supercats: moving on to the next act

Heineken ended up paying top dollar – a multiple of 18 times earnings before interest, taxes, depreciation and amortisation. (Recently Anheuser-Busch InBev paid 15 times EBITDA to acquire Mexican beer giant Grupo Modelo.)
ThaiBev shares on the Singapore Stock Exchange rocketed up 17.4 per cent.
ThaiBev will receive a dividend from F&N as its share of the proceeds from the sale of APB to the tune of US$1.6 billion (Bt49.5 billion).
Now ThaiBev can do exactly what it has wanted to do all along, which includes not buying Tiger.
The Singapore-listed Thai company has already purchased 30 per cent of the shares of F&N, requiring ThaiBev by law to make an offer for the full company. It has done so, putting in a bid of $7.2 billion.
There is another company, privately held but controlled by the same man who controls ThaiBev – TCC Assets. A major holder of real estate in Thailand as well as Singapore, TCC Assets is holding assets including five-star hotels as well as the new development growing on the banks of the Chao Phraya River called Asiatique.
F&N has three remaining core businesses after divesting APB: non-alcoholic drinks, real estate, and distribution. The real-state business alone accounts for half of the revenue of F&N.
With the cash ThaiBev and TCC receive from the sale of APB, they will be able to make a play for all of F&N, taking over lucrative real-estate holdings and non-alcoholic drinks. Critically, some analysts estimate that the offer is for a 30-per-cent discount on the value of the assets.
Sell high, buy low is a winning strategy in any area.
There’s a wild card in the whole mix, however. Kirin Holdings of Japan, maker of Kirin Beer, owns 15 per cent of F&N. Kirin has absolutely no interest in real estate, and is currently sitting on a 37-per-cent profit on the purchase of its shares of F&N. ThaiBev/TCC has to make Kirin happy. What would do so is Kirin taking some of the non-alcoholic-beverage businesses of F&N.
The man behind the scenes, Charoen Sirivadhanabhakdi, is a brilliant strategist as well as tactician. Watch for him to negotiate over the next several weeks (in private, of course) with Kirin. Watch the business pages of The Nation and you will soon see an announcement of how TCC and Kirin plan to carve up the assets of F&N among them.
Charoen developed a long-term strategy years ago and we are now watching him execute it. Success in business comes from having a strategy, executing it well, and then learning from past mistakes to do better in the future. Explore, execute, evaluate are the “3 E’s” of all successful businesses.
Eric Rosenkranz ([email protected]) runs a strategic advisory in Southeast Asia helping existing companies as well as start-ups to develop their long-term strategy and achieve success in their business. Learn more about his company at www.ethree-asia.com.