* Overseas Union-led consortium launches S$13.1 bln
* Consortium offers S$9.08 a share vs Thai offer of S$8.88
* Consortium's offer near middle of F&N advisor's range
* F&N, OUE shares jump; market expects higher offer
* Credit Suisse, BofA underwriting bridge loans-sources
(Adds comments from Overseas Union chairman, analyst)
By Eveline Danubrata and Saeed Azhar
SINGAPORE, Nov 16 A consortium led by Overseas
Union Enterprise Ltd launched a S$13.1 billion ($10.7
billion) bid for Fraser and Neave Ltd (F&N),
challenging a takeover offer from Thailand's third-richest man
for the Singapore conglomerate.
The counter-bid, if successful, would mark the largest-ever
M&A deal in Southeast Asia. The F&N board has yet to recommend
it to shareholders, the biggest of which are companies linked to
Thai billionaire Charoen Sirivadhanabhakdi including Thai
Beverage PCL and TCC Assets Ltd.
Charoen is likely to raise its S$8.88-a-share offer in
response to the S$9.08-a-share bid announced by Overseas Union
on Thursday as they battle to control F&N, whose real estate
portfolio is worth more than S$8 billion, analysts said.
"OUE's offer is likely to be the first salvo in this fight,"
Jit Soon Lim, head of Southeast Asian equity research at Nomura,
said in a note to clients. "TCC is likely to counter offer as it
will want to defend its interest in the group."
The tussle also pits Charoen against one of the region's
most powerful tycoons - Stephen Riady, the chairman of Overseas
Union and son of Lippo Group founder Mochtar Riady.
Singapore-based Overseas Union is majority-owned by Lippo Ltd
, part of the Lippo Group, through its subsidiaries.
Overseas Union said in a statement on Thursday that it has
secured conditional support from F&N's second-biggest
shareholder Kirin Holdings Co Ltd to bolster its
chances of success.
Kirin, which owns around 14.8 percent of F&N, will offer to
buy the conglomerate's food and beverage business if the
consortium's bid was successful, according to Overseas Union.
The Japanese brewer was not listed as part of the consortium in
Overseas Union is bringing out the big guns to gain control
of the 129-year-old F&N, which manages thousands of serviced
resident apartments in cities like London, Paris and Dubai. The
conglomerate's property portfolio also includes retail malls,
office towers and high-tech business parks in Singapore,
Australia and Japan.
"All are good assets," Stephen Riady told Reuters on the
sidelines of a conference on philanthropy held by Credit Suisse
at the National University of Singapore on Friday, adding that
they complement those owned by Overseas Union.
Credit Suisse and Bank of America Merrill Lynch
are underwriting a bridge loan that covers the scale of the
counter-bid, sources with knowledge of the matter said, while
CIMB is also providing some financial support to Overseas Union.
The bridge loan will be around $8.5 billion to $10.5 billion
in size, making it one of Asia's largest bridge financing deals,
other sources familiar with the matter said, declining to be
identified because they were not authorised to speak to the
media on the subject.
The bridge loan will have a 12-month maturity, and the bulk
of it will be repaid from the proceeds generated from the sale
of F&N's beer, food and beverage businesses, the sources said.
Dutch beer giant Heineken NV agreed in late
September to buy F&N's stake in Tiger beer maker Asia Pacific
Breweries Ltd (APB) for S$5.6 billion. Overseas Union
said Kirin has agreed to buy F&N's food and beverage business
for S$2.7 billion if the counter-bid was successful.
The counter-bid was placed by a consortium that includes
investment funds and accounts managed by Farallon Capital
Management LLC and Noonday Global Management Ltd.
"These guys are prepared for the long-drawn (battle) unless
the Thais give a knockout offer," a source with direct knowledge
of the matter said about Overseas Union's bidding strategy.
Shares in Overseas Union rose 4.3 percent in Singapore
trading on Friday, while F&N advanced more than 2 percent to
S$9.33, indicating the stock market is expecting an even higher
Shares in Kirin declined 3 percent in Tokyo.
CHAROEN TO FIGHT BACK
The S$9.08 counter-offer values the company in the middle of
the S$11.9 billion-S$16.1 billion range estimated by F&N's
independent financial adviser JP Morgan.
In an unusual move, F&N agreed to pay a break fee of as much
as S$50 million to Overseas Union to create a competitive
bidding environment, a source with knowledge of the matter said,
even though F&N's board has not recommended the offer to
If recent history is any guide, Charoen is likely to put up
a strong fight. Earlier this year, the Thai billionaire forced
Heineken to raise its offer to get control of APB.
Charoen, through TCC Assets and Thai Beverage, made a $7.2
billion bid in September to buy shares of F&N that he did not
already own, valuing the Singapore group around S$12.8 billion.
The Thai group has a 33.6 percent stake in F&N and can
acquire another 2.8 percent from shareholders who accepted its
offer. The Thai offer is conditional on the group obtaining
majority control of F&N.
F&N is slated due to announce quarterly earnings later on
(1 = 1.2227 Singapore dollars)
(Additional reporting by Prakash Chakravarti of LPC/IFR,
Charmian Kok in SINGAPORE, Denny Thomas and Stephen Aldred in
HONG KONG; Editing by John O'Callaghan and Ryan Woo)