ThaiBev Seeks Around S$9 billion Loan for Possible F&N Takeover
Thai Beverage PCL is seeking a loan of around S$9 billion (US$7.3 billion) to fund a possible takeover of Singapore drinks-and-property group Fraser and Neave Ltd (F&N) in a deal that will give it the right to block rival Heineken NV’s bid for F&N’s key beer business.
The move comes as F&N shareholders, which include Japan’s Kirin Holdings, prepare for a crucial vote on September 28 on the proposed sale of a 40 per cent stake in Tiger beer maker Asia Pacific Breweries Ltd to Heineken. Buying out F&N would give ThaiBev, already F&N’s biggest shareholder, the management control it needs to scuttle the deal.
ThaiBev, controlled by billionaire Charoen Sirivadhanabhakdi, has asked several lenders, including Singapore, Malaysian and Japanese banks, to submit financing proposals for a bridge loan, said Basis Point, a Reuters publication, citing banking sources that it did not identify.
International Beverage Holdings Ltd, a wholly-owned subsidiary of ThaiBev, would be borrowing on behalf of its parent, one of the sources said, adding that the loan would be backed by F&N shares. It is not clear if the F&N shares would be the ones that ThaiBev already owns or if they include shares that they might buy.
“This battle might lead to a hostile takeover of F&N. Will a change of control of F&N revoke the Asia Pacific Breweries bid and the arrangement between Heineken and F&N? Likely,” said a banking source, who spoke on condition of anonymity.
A spokeswoman for ThaiBev declined to comment. Heineken also declined to comment.
Heineken, which already has a stake in APB, raised its offer last month to buy out APB shares held by F&N and minority shareholders to US$6.3 billion. The move was seen as an attempt to fend off Charoen in a battle for control of a leading brand in the fast-growing Southeast Asian beer market.
Last week, F&N’s board said Heineken, its partner in a venture that owns 65 per cent of APB, had first right of refusal on its shares.
Analysts have cautioned against discounting Charoen, who is known for being a dogged fighter. The billionaire is Thailand’s third-richest man with an estimated net worth of US$6.2 billion, according to the latest Forbes report.
Charoen has consistently shown in the past a “willingness to take risks and face down competitors,” said Mykolas Rambus, CEO of Singapore-based consultancy Wealth-X.
ThaiBev has already bought 29 per cent of F&N for S$3.6 billion, funded partly by a S$2.8 billion loan, but does not have a seat on the F&N board. If ThaiBev’s holding hits 30 per cent, it would be obliged to bid for all of F&N.
The purchase includes a block of F&N shares the Thai brewer acquired from Singapore’s Oversea-Chinese Banking Corp group at S$8.88 each.
“If ThaiBev is indeed sourcing for funds, people will look at the S$8.88 that they paid for the OCBC block. They might be looking at that as an upside,” said Goh Han Peng, an analyst at DMG & Partners Securities.
“Banks will take comfort in the fact that the company is one of the leading brewers in Thailand as well as the fact that the founder is financially quite well-off. Having said that, for the listed company (ThaiBev) to take on the deal itself will be a stretch financially.”
HSBC Holdings PLC, Standard Chartered PLC and Sumitomo Mitsui Financial Group Inc, the three lenders who provided S$2.8 billion in bridge loan to ThaiBev, have been approached by the Thai group, Basis Point reported, citing sources that it did not identify.
ThaiBev is seeking a separate five-year loan of S$3.3 billion to replace the S$2.8 billion bridge loan, Basis Point said.
Taking over F&N will also give ThaiBev ownership of one of Asia’s biggest property portfolios.
F&N, through its subsidiary Frasers Centrepoint Ltd, has a portfolio of residential properties, serviced residences, real estate and fund management, as well as commercial properties which include retail malls, offices and business parks.
Frasers Centrepoint’s property assets are worth over S$8 billion, according to a F&N spokeswoman.
The F&N unit operates nine retail malls in Singapore, including The Centrepoint located in Orchard Road, the city-state’s prime shopping district.
With the size of the property portfolio, few buyers would have deep enough pockets, investment bankers said. ThaiBev would likely need to partner with a sovereign wealth fund such as the Abu Dhabi, Qatari or Kuwaiti funds, they said.
F&N’s property business has also attracted potential investors such as the property private equity arm of Blackstone Group LP, but the size of the deal makes it hard to swallow and there are not that many flagship assets in the portfolio, a source with knowledge of the matter said, declining to be identified because the details are confidential.