The F&N board has already accepted Heineken’s improved S$53/share offer for its 39.7% stake in APB; the deal also includes the Singapore-based firm’s interest in Asia Pacific Investment (APIPL).
Heineken already controls 46.2% of APB both directly and through its JV with F&N, but is locked in a fierce battle with local rival and (Chang brewer) ThaiBev for control of APB, owner of the Tiger, Anchor and Bintang brands.
The latter raised its stake in F&N to 29% on August 28, just below the threshold level that would trigger a mandatory offer for the conglomerate.
The analyst consensus is that Heineken is almost over the finishing line, and that ThaiBev will struggle to finance a general offer for the whole of F&N without the help of a third party.
It also needs the support of Japan’s Kirin Holdings, holder of a 15% stake in APB, and other influential shareholders, to defeat Heineken’s take-it-or-leave-it offer with a combined 51% majority.
EGM could swing either way?
Nonetheless, one Singapore-based analyst told BeverageDaily.com this morning: “This could still swing both ways. On one hand there is a sizeable payoff for ThaiBev, but if it wants to block Heineken's offer, the EGM result depends on how much influence ThaiBev has,” he said.
“Given ThaiBev’s fairly high shareholding in F&N, this could be pretty significant.
“They could possibly, possibly, use this influence to derail the deal, although other F&N shareholders would not be happy given that they have the prospect of quite a handsome payoff,” the analyst added.
One theory is that ThaiBev may be interested in buying F&N shorn of its brewing interests, since the latter’s empire also extends to a strong Southeast Asian presence in soft drinks and dairy, interests that would likely be sold separately if F&N divested APB.
Today, F&N chairman Lee Hsien Yang re-emphasized his support for Heineken’s offer, which shareholders must ratify by a simple majority.
“Heineken’s improved offer represents the best opportunity for the group to immediately realize the value of our interests in APB and APIPL and maximizes overall returns for F&N shareholders,” he said.
‘Attractive premium’ from Heineken offer
F&N’s board believed Heineken’s improved offer represented an “attractive premium” to historical trading prices and valuation multiples of comparable companies.
If, as expected, shareholders ratify Heineken’s offer, they could be rewarded with a cash distribution of around S$4bn drawn from proceeds of the deal, by way of a capital reduction.
This is also subject to approval – this time with at least 75% shareholder support – and will see one F&N share cancelled for every three held, at S$8.50 per cancelled share.
In a Singapore Stock Exchange release, F&N said this meant that a shareholder with (for example), 1000 shares, would receive S$2,805, but retain a similar proportion of shares in F&N thereafter.
“The proposed distribution of the proceeds by way of capital reduction is a win-win as it achieves a more efficient capital structure post disposal, while allowing us to distribute substantially the gain on disposal to F&N shareholders,” Yang added.
F&N’s CEO said that remaining proceeds (around 16% of F&N gain from the APB and APIPL disposals) would be used to repay a chunk of F&N’s debts, giving the firm flexibility to pursue business opportunities in the food and beverage and properties businesses across the region.