* Shareholders keen to know details of F&N's future business
focus without APB before vote
* Minority shareholders collectively own 59 pct of F&N
* Thai Beverage owns 26 pct, Kirin owns 15 pct
By Charmian Kok
SINGAPORE, Aug 25 Shareholders of Fraser and
Neave (F&N) are urging the board to outline a future
without Asia Pacific Breweries before they vote on a S$5.59
billion ($4.49 billion) deal to sell F&N's stake in the maker of
Tiger Beer to Heineken.
Convincing shareholders of the merits of selling its roughly
40 percent stake to the Dutch brewer is crucial to the deal's
success and to overcoming any opposition by billionaire Charoen
Sirivadhanabhakdi, who controls F&N's biggest stakeholder Thai
Beverage PCL. The board needs the support of the
minority shareholders, which own 59 percent of F&N.
Four F&N institutional investors told Reuters the Singapore
conglomerate had not approached them seeking support for the APB
deal. F&N also has not gone to them with details on how it plans
to use the sale proceeds or what they think the company will
look like post-APB, they said.
"We need to know where do we go from here, do we sell off
everything and call it a day or focus on property? What do we do
with the money? Give back to shareholders, invest in existing
businesses or start new businesses?" said Hugh Young, managing
director of Aberdeen Asset Management Asia Ltd, which owns 0.39
percent of F&N.
Those factors will be considered when shareholders cast
their votes, Young said.
F&N will continue to focus on its food and beverage,
properties and publishing businesses, the group said in an
emailed reply to questions on its future without APB.
Companies usually try and ensure there is support from
shareholders before agreeing to major deals rather than making a
decision and risking a veto by shareholders during a vote. Some
of F&N's minority shareholders have been surprised that the
group has not tried to win them over in this case.
While F&N's board is not obliged to disclose details of its
plans to shareholders, it will eventually have to seek their
approval for the sale of a key business unit like APB.
"You want some articulation of what's to be done with the
proceeds if they are recommending (the deal)," said Young.
The F&N minority shareholders Reuters spoke to did not
indicate if they would vote against the deal or refrain from
voting at this time.
F&N said last week it planned to convene an extraordinary
general meeting to seek approval of all shareholders on the
sale, but has not yet decided on a date.
"We are a little surprised they haven't approached us yet.
Normally in takeovers they would have to sound out the bigger
shareholders," said a source with an F&N institutional
shareholder, who declined to be named because he was not
authorised to speak to the media.
Besides giving its stamp of approval on Heineken's $6.35
billion offer for the stakes held by F&N and APB's minority
shareholders, F&N's board also agreed not to engage in talks or
accept other offers for its interests in APB.
Heineken also attached a S$55.9 million break fee on its
offer and set a Dec. 15 deadline.
While such penalty clauses are not uncommon, some
shareholders say the clause puts F&N at risk since there is no
guarantee the deal will be approved. Moreover, it was Heineken
that sought full control of APB rather than F&N, which offered
the stake for sale.
"The board was wrong in locking itself into a deal with
Heineken. The break fee is even worse," said Mano Sabnani, CEO
of corporate advisory firm Rafflesia Holdings, who did not say
if he holds F&N shares.
Although F&N will gain S$5.59 billion from the sale of APB,
its earnings base would be significantly reduced without future
income from the beer maker. APB generated about 48 percent of
F&N's earnings for the nine months ended June, according to
A successful deal with Heineken could lead to a breakup of
F&N, with Coca-Cola eyeing its popular soft-drink 100PLUS, fruit
juices, mineral water and dairy products unit.
Coca-Cola, the world's largest soft-drinks maker, sees a
possible opportunity to bid for F&N's beverage business but is
waiting to see how thintgs go, a source familiar with the
situation told Reuters.
A group linked to Charoen had countered Heineken's initial
S$50 a share offer by making a S$55 bid for F&N's direct stake
in APB. The partial bid for APB expires on Friday.
F&N's second-largest shareholder is Kirin Holdings,
which holds a 15 percent stake in the Singapore conglomerate and
has one seat on its board.
The board on Aug. 18 recommended Heineken's sweetened $53 a
share offer to F&N shareholders.
Kirin declined to comment.
Prudential PLC is another large F&N shareholder with
a 8.0175 percent group interest held via units including
Eastspring Investments and M&G Investment Management Ltd.