Battle for control of F&N now a waiting game

Anticipation of a bidding war has intensified after the conglomerate’s independent directors said that both offers on the table are “not compelling” though “fair”.
The bid of 8.88 Singapore dollars (Bt223) a share from Thai tycoon Charoen Sirivadhanabhakdi and S$9.08 offer from a consortium led by Overseas Union Enterprise (OUE) will both expire early next month.
Any move from either could come even before that, with signs they are manoeuvring behind the scenes to lift their chances of winning the tussle.
“The market is anticipating a bidding war between the two contenders and for either one of the parties to raise its offer,” said DMG & Partners analyst Goh Han Peng.
Both contenders are far from getting the necessary 50-per-cent control of F&N – so both have strong reasons to raise their bids.
The lukewarm responses from F&N’s directors to the offers provide further reasons for shareholders to hold out for something better.
On Wednesday, the directors called OUE’s offer “not compelling, though fair” in a circular to shareholders – using the same language they earlier used to describe Charoen’s bid.
The directors added that the OUE bid of S$9.08 per share was at the “low end” of the S$8.58-$11.56 range of values that independent financial advisers had ascribed to F&N’s stock.
The same term was used to describe Charoen’s offer, although the advisers have raised the range of values for F&N in the two months that passed since they assessed the Thai tycoon’s bid.
F&N’s shares lost 3 cents to S$9.63 yesterday. With the stock trading above both Charoen’s and OUE’s bids, they cannot accumulate shares on the market without raising their entire offers.
Either party’s offer will turn unconditional only if it gets enough acceptances or buys enough stock to give it 50 per cent control of F&N.
“Either party could fire the next salvo by raising its offer, but the pressure on OUE to do so is greater as it is currently the challenger with a smaller stake in hand,” Goh said.
Charoen’s parties have more than 34 per cent of F&N, including acceptances, while OUE has less than 15 per cent, including acceptances, to its offer.
OUE’s acceptances include the 14.8 per cent from second-largest shareholder Kirin Holdings, which agreed to tender shares to it.
Goh said: “To have a meaningful chance of clinching majority control of F&N, OUE’s offer will have to be substantially more attractive than the Thais’ offer to entice the remaining minorities of F&N to part with their shares.”
Investor Mano Sabnani, who holds F&N shares, said both offers were “outdated”, as the market price was already much higher.
“I think they will have to make higher offers, closer to the market price, before they can secure 50 per cent,” he said. “Either party will have to look at closer to $10 to secure the acceptance levels.”
There is evidence that Charoen is working hard behind the scenes to seal the deal.
Bloomberg and Reuters reported this week that he tried to buy about 10 per cent in F&N for S$9.60 a share from some funds but the deal was not completed. If he had succeeded, he would have had to raise his entire general offer.