Thai billionaire Charoen Sirivadhanabhakdi has launched an ambitious bid to propel his property and brewing group beyond its home market with a $7.1-billion (U.S.) cash offer for Fraser and Neave, the Singapore conglomerate at the centre of a bid battle for one of Asia's biggest beer makers.
The move could thwart efforts by Heineken NV, the Dutch brewer, to acquire control of Asia Pacific Breweries, maker of Tiger beer, and expand into Asia's fast-growing market.
It would also be the third-largest cross-border deal on record in Asia outside Japan, according to Dealogic. The two others were the acquisition in 2010 by French insurer AXA of Australian rival AMP Ltd.'s Asian business, and Vodafone Group PLC's acquisition of Hutchison Essar in 2007.
Thai Beverage, a Singapore-listed beer maker controlled by Mr. Charoen, has in recent weeks become the largest single shareholder in F&N as part of a complex struggle with Heineken over APB. F&N currently runs APB as a joint venture with Heineken.
F&N has already recommended to its shareholders a $42 (Cdn) per share bid, or $4.2-billion, offer by the Dutch brewer to buy out F&N's interests in APB.
That is subject to a shareholder vote this month. But Mr. Charoen's bid for the whole of F&N casts the earlier offer into doubt.
TCC Assets, a vehicle controlled by Mr. Charoen and his wife, acting in concert with ThaiBev, on Thursday offered S$8.88 ($7.03) a share for F&N.
F&N shares rose 4.8 per cent to S$8.92 on Thursday while ThaiBev gave up earlier gains to close flat.
"One possible outcome is that if TCC is successful in gaining control of F&N, it would want to renegotiate the sale of APB to Heineken," said Lim Jit Soon, an analyst at Nomura. "One risk of the scenario is that the sale falls through and further strains the relationship with Heineken, with implications for marketing rights for Heineken by APB in Asia."
Heineken said that it would review the content of ThaiBev's announcement carefully and had no further comment.
The Thai offer will be financed by DBS, Singapore's largest bank by assets; United Overseas Bank, a rival; and Morgan Stanley. The three are all also advising TCC Assets.
The offer was triggered after ThaiBev raised its earlier 28.9-per-cent stake in F&N beyond 30 per cent. Under Singapore's listing rules a bidder must make a mandatory offer for the company if that threshold is passed.
ThaiBev said it had bought an additional 1.37 per cent of F&N shares at S$8.80-S$8.88 per share.
F&N has a large Singapore property portfolio and operates thousands of serviced apartments in London, Paris, Seoul and Dubai. Mr. Charoen also has property interests, including a hotel in New York.
Analysts have said the Thai billionaire, son of a Bangkok street vendor, believes that F&N's property portfolio is worth more on a standalone basis and would make a good fit with his existing property interests.
Thwarting Heineken in its attempt to snare APB would also allow him to add the Tiger beer brand, seen as a premium product, to his mass-market Chang beer sold in Thailand. It would also be a blow to Heineken, which relies on APB for distribution of its beer in most markets in south-east Asia.
Thapana Sirivadhanabhakdi, ThaiBev chief executive, said: "We believe the offer represents an opportunity for F&N shareholders to realize the value of their investment in cash and to make a complete exit from F&N."
Mr. Charoen's ultimate holding company is privately held Thai Charoen Corp. Group, one of Thailand's biggest companies. Established in 1960, its business covers beverages, trading and consumer products, property investment and development, insurance and leasing and other businesses.