Singapore conglomerate F&N shares hit record on bid for US$2b stake

July 17, 2012

SINGAPORE, July 17 - Shares in Fraser and Neave Ltd (F&N) jumped to a record on Tuesday after top shareholder Oversea-Chinese Banking Corp and insurer Great Eastern Holdings said they had received a bid for their US$2 billion (RM6.4 billion) combined stake in F&N and an affiliated brewer.

The bid could lead to a break-up of the beverages and property conglomerate, analysts have said, because its diverse businesses are valued more individually than as a group. The company received 59 per cent of its 2011 revenue from its food and beverage business and 34 per cent from property. F&N also has interests in publishing, printing and other businesses.

The bidder, who was not named, also offered to buy a 7.92 per cent stake in brewer Asia Pacific Breweries Ltd owned by Great Eastern and OCBC, Singapore's second-biggest bank. The two stakes were valued at about $2 billion.

The bid could also complicate relations between Dutch brewer Heineken NV, which controls a separate beer maker with F&N, and Japanese brewer Kirin Holdings Co, which owns nearly 15 per cent of F&N.

F&N shares surged as much as 5.6 per cent to S$8.34 and were among the top-traded stocks by value today. Volume rose to more than 3 million shares in the first two hours of trading, more than double the average full-day volume over the past 30 days.

“The prize here is really the distribution network, whether it's for the soft drinks or the beer business,” said James Koh, an analyst at Maybank Kim Eng. “If a buyer were to come in and offer a good price, I think they will sell.”

So far this year F&N's shares have surged more than 27 per cent based on yesterday's close, compared to a 13 per cent gain in the Straits Times Index.

The bid comes two years after Kirin paid $984 million for Singapore state investor Temasek Holdings' 14.7 per cent stake in F&N.

Nomura said in a research report that possible suitors could be Heineken, Kirin or a group backed by private equity funds.

Heineken and F&N control Asia Pacific Breweries through a separate unit. A spokeswoman for Kirin declined to comment.

In an interview with the Financial Times last August, the chief executive of Heineken, Jean-François van Boxmeer, said he was uncomfortable with the 2010 change of ownership at F&N that put F&N into bed with rival Kirin. — Reuters