F&N suitors acting 'half-heartedly'

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Analyst wonders whether they are really interested.

IG Markets Singapore noted:

In Singapore one M&A story very much in play is the battle for Fraser & Neave.

This week we have two deadlines from the potential suitors to look out for. Thai tycoon Charoen sees his TCC offer of $8.88 end today while tomorrow it is the turn of rival OUE, which put in a slightly higher $9.08 bid.

Both bids fall into the “not compelling but fair” bracket according to F&N’s advisers JP Morgan and it has a point. Both offers fall well short of what shareholders should be expecting for the drinks and property conglomerate which has a market value of at least $14 billion.

There is little to choose between both low-balls offers and with F&N’s share price touching $9.70, shareholders will be expecting greatly-improved offers this week.

But there is the danger they may be sadly disappointed as both the Thais and OUE have so far acted in a half-hearted manner towards acquiring F&N. Both had the opportunity to put in a $9.50 a share bid and seal the deal last year.

Plus the Thais originally wanted Asia Pacific Breweries, which eventually fell into the hands of Heineken. And OUE originally wanted the hospitality property business of F&N. Are they really interested in F&N as a valuable acquisition or more concerned about it falling into the hands of a rival?

If neither of the rival bidders can raise the stakes, F&N shareholders could reject both offers which may take some fizz out of the current share price.



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