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Reuters

Thai Beverage raised its stake in Fraser and Neave (F&N) to just below the level that would trigger a mandatory offer for the whole conglomerate, further challenging Heineken’s bid for the group’s crown jewel Asia Pacific Breweries (APB).
ThaiBev, controlled by billionaire Charoen Sirivadhanabhakdi, said on Tuesday that it had bought a 2.6 per cent stake in F&N for S$316 million (US$252 million) to bring its interest to 29 per cent. If its holding hits 30 per cent, ThaiBev would be obliged to bid for all of the Singapore conglomerate.
The stake increase is the latest move in a six-week battle pitting ThaiBev against Heineken. The Dutch brewer, the world’s third-largest, was jolted into action when Charoen became the largest shareholder in F&N, with which Heineken has a joint venture controlling Tiger beer maker APB.
“If Thai Beverage crosses the 30 per cent mark and makes a general offer, then they can block Heineken’s bid for APB. But whether or not they have the intention or the money to buy F&N, that’s anybody’s guess,” said Ng Kian Teck, lead analyst at SIAS Research.
A full takeover would stretch ThaiBev’s finances.
Moody’s Investors Service said this month that ThaiBev’s Baa2 rating remained under review for downgrade after it acquired a 22 per cent stake in F&N from Singapore’s OCBC group last month.
“ThaiBev doesn’t have the desire to buy the whole of F&N. If they want to block Heineken’s bid for Asia Pacific Breweries, they need to win over Kirin and some other institutional shareholders to get the 51 per cent majority,” a banking source said.
ThaiBev declined to comment on its plan.
Heineken is seeking to convince F&N shareholders to accept its S$7.94 billion offer to buy the Singapore beverages-to-property group out of the joint venture and take F&N’s 7.3 per cent direct stake and APB shares held by others.
Those F&N shareholders also include Japan’s Kirin Holdings , which owns just under 15 per cent of the conglomerate.
“ThaiBev’s move is probably expected. They would want as much control as possible, but we doubt they will want to do a general offer. It could be quite an expensive exercise and there are still big shareholders on the F&N side like Kirin,” said Christopher Wong, an investment manager at Aberdeen Asset Management Asia, which owns F&N shares.
A debt financier said ThaiBev would need financing of between $10 billion and $11 billion in total to buy out F&N, which currently has a market value of US$9.4 billion.
ThaiBev has already spent S$3.6 billion to acquire 29 per cent of F&N and partly funded the purchase through a S$2.8 billion loan facility.
“Thai banks will clearly be key to the overall financing as ThaiBev will consider every conceivable pocket of liquidity,” said the debt financier, who declined to be identified because of the sensitivity of the matter.
The F&N board has proposed a S$4 billion payout to shareholders through a capital reduction, if they approve the sale of APB to Heineken. Analysts say that payout could sway minority shareholders in favour of the deal.
A shareholder meeting is expected in October to vote on the APB sale, a source familiar with the plans told Reuters, adding that a firm date has not been set yet.
	One analyst said ThaiBev may be looking at F&N even without its brewery business.
“They see F&N as strategic to their growth ambitions, not just purely on the brewery side but also the soft drinks, which have a strong ASEAN presence, dairies and property,” said Goh Han Peng, an analyst at DMG & Partners Securities in Singapore.


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