SINGAPORE (Reuters) - Thai billionaire Charoen Sirivadhanabhakdi launched a $7.2 billion offer to buy out other shareholders of Fraser and Neave Ltd (F&N), potentially derailing Heineken NV's (HEIN.AS) bid to take full control of F&N's prized beer business.
Charoen's move to take over the Singapore drinks-and-property group before a key F&N shareholders vote has raised doubts on whether the sale of F&N's 40 percent stake in Asia Pacific Breweries Ltd (APB) APBB.SI is a done deal as predicted by industry watchers just a week ago.
Thailand's third-richest man, who controls 30.36 percent of F&N, needs a simple majority of votes at the meeting on September 28 to overturn the deal that F&N's (FRNM.SI) board and the Dutch brewer reached on August 18. That means Heineken needs to rally shareholders with a collective interest exceeding Charoen's stake to push through its $6.3 billion purchase of all the shares in the Tiger beer maker, including F&N's APB stake.
Charoen, who holds a stake in F&N through Thai Beverage PCL (TBEV.SI), is launching the takeover of the Singapore group through a separate company TCC Assets Ltd.
"It would appear that TCC is likely to thwart the sale of APB to Heineken. 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," Jit Soon Lim, an analyst at Nomura, said in a note to clients.
F&N's other large shareholders include Japan's Kirin Holdings Co Ltd (2503.T), which owns nearly 15 percent. Kirin said previously that it was interested in F&N's food and non-alcoholic drinks business.
TCC's offer of S$8.88 per F&N share values the Singapore conglomerate at 20 times historical price-earnings, excluding exceptional items. That valuation exceeds F&N's worth before the battle for APB began in July but is still below the S$9-S$10 that many analysts say is fair value.
Under Singapore law, a bidder must make a mandatory offer for a company if its stake reaches 30 percent. Having made an offer, TCC can now buy F&N shares on the open market so long as the price does not exceed S$8.88.
The TCC offer, which is backed by loans from Singapore banks DBS Group Holdings Ltd (DBSM.SI) and United Overseas Bank Ltd (UOBH.SI), will not be formally presented to shareholders for another two to three weeks, according to TCC's statement.
Besides the two Singapore lenders, Morgan Stanley is also advising the Thais.
"One risk of the scenario is that the sale (of APB) falls through and further strains the relationship with Heineken, with implications for marketing rights for Heineken by APB in Asia," Nomura's Lim said.
Heineken beer accounts for about 30 percent of APB's sales by volume, according to analysts.
However, ThaiBev has not said how it will vote at the September 28 meeting, and banking sources say TCC may be prepared to let go of APB and focus on the remaining food-and-drinks and property businesses.
The Thais recently bought out Pepsi's bottling business in Thailand, and Charoen already has substantial investments in Singapore property.
F&N's property portfolio, worth more than S$8 billion, has also attracted the interest of Blackstone Group LP (BX.N) and other global property companies, sources have told Reuters, while the beverage business could appeal to potential suitors including Coca-Cola Co (KO.N).
Forbes estimates Charoen's wealth at $6.2 billion, while Singapore-based consultancy Wealth-X has a higher estimate of $6.3 billion. Wealth-X also said Charoen's wife has about $1.4 billion of stock and assets in her name.
"We hold F&N in high regard, and we believe its long-established track record and success in its core businesses will be beneficial to our group," Thapana Sirivadhanabhakdi, Charoen's son and ThaiBev's chief executive officer, said in a statement.
ThaiBev's shares jumped nearly 3 percent in early trade on Thursday, while F&N requested a halt in trading of its shares.
For its part, Heineken only took note of ThaiBev's latest announcement. "The company will review the content carefully and has no further comment to make at this time," the Dutch brewer said.
Breweries contributed 41.1 percent of F&N's total revenue of S$4.02 billion for the nine months to June 30. Soft drinks and dairy products made up 29.2 percent, property was 21.3 percent and printing and publishing was 7.1 percent.
F&N is the leader in the soft drinks markets in Singapore and Malaysia, with a 24.5 percent and 26.9 percent market share, respectively, according to Euromonitor. But F&N's reach in the rest of the region is weak and its Asia-Pacific market share is only 0.3 percent.
F&N's other soft drinks assets include distribution networks in emerging markets such as Vietnam and Myanmar.
F&N said on Wednesday that its board recommended Heineken's offer partly because of the attractive valuation and limited options for the stake held by their joint venture in APB.
Heineken had first right of refusal to the 65 percent of APB shares held by the joint venture between F&N and Heineken.
($1 = 1.2296 Singapore dollars)
Writing by Kevin Lim; Additional reporting by Charmian Kok in SINGAPORE,; Prakash Chakravarti and Denny Thomas in HONG KONG, and Khettiya Jittapong in BANGKOK; Editing by John O'Callaghan, Ken Wills and Ryan Woo