UPDATE 1-Charoen group fails in bid to boost F&N stake -sources

Tue Dec 18, 2012 12:18am EST

* Thai group offered S$9.60 to buy 10 pct of F&N to funds-sources

* Citi was trying to broker the deal that was launched Friday-sources

* Charoen expected to raise bid next month-sources

By Saeed Azhar

SINGAPORE, Dec 17 (Reuters) - Thai beer baron Charoen Sirivadhanabhakdi tried and failed to acquire an additional stake of 10 percent in Fraser and Neave Ltd (F&N), piling pressure on him to raise his earlier $7.2 billion takeover bid for the Singapore conglomerate.

Charoen, whose Thai Beverage PCL and TCC Assets Ltd own a combined 34 percent of F&N, is trying to increase his stake in F&N to more than 50 percent by next month, when his takeover bid for the 129-year-old beverage and property group expires.

Talks between companies controlled by Charoen and institutional investors in F&N began late on Friday with Citigroup Inc trying to broker a deal, and the negotiations have since broken down, sources with direct knowledge of the transaction told Reuters. The sources declined to be identified as the discussions were confidential.

"It was a disaster," said one of the sources. "It is back to the drawing board."

The Thai billionaire in September offered to buy F&N shares that he did not already own for S$8.88 apiece, which F&N's independent financial adviser described as "not compelling though fair."

In November, a bidding war unfolded when a group led by Singapore-listed Overseas Union Enterprise placed a competing offer of S$9.08 a share for F&N.

Shares in F&N have consistently traded above the two bids, edging up 0.21 percent to S$9.65 in late morning trade on Tuesday.

"Investors are buying time, there's nothing to lose," said Ng Kian Teck, lead analyst at SIAS Research in Singapore. "There's still an ongoing bidding war, so you never know if OUE will come up with a price higher than S$9.60."

Since the original Thai offer in September, the market value of F&N has risen more than 13 percent to $11.4 billion, reflecting investor expectations that the Thais would raise their bid or a rival offer for the Singapore group would emerge.

"We continue to maintain our stance that the shares offer value even above S$10/share," Religare Capital Markets said in a research note.

HEDGE FUNDS

The potential stake sellers included at least two Hong Kong-based hedge funds, which rejected the Thai deal of S$9.60 a share, sources said. It was not clear why the funds backed off.

Had the bid for a further 10 percent, made by a group linked to Charoen, been successful, it would also have forced the Thais to raise their existing bid for F&N under Singapore rules.

The Thais' current takeover offer for F&N, which expires on Jan. 2, is likely to be extended to the fourth week of January when it will have to revise its current offer, sources said.

"Shareholders should note that unless a formal announcement is made, there is no certainty that any transaction would materialise and/or any revision of the offer price would be made," Charoen's TCC Assets said in a statement.

A Citigroup spokesman in Hong Kong declined to comment.

F&N's board is expected to consider a report from its independent financial adviser JPMorgan by Thursday on the rival S$13.1 billion bid from the Overseas Union group.

Nomura said in a note earlier this month that it expects the Overseas Union consortium may be prepared to bid up to S$9.88 per share for F&N.

F&N shares have surged more than 50 percent so far this year, outperforming an 18 percent gain in the benchmark Straits Times Index.

F&N has property assets worth more than S$8 billion ($6.55 billion) as well as soft drinks and printing businesses.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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