OUE, Kirin, TCC scramble for a bidding showdown

Everyone's got their game faces on.

According to CIMB, OUE is believed to be preparing to bid for F&N together with Kirin, according to a Reuters report.

Here's more from CIMB:

If this offer materialises, it will mean the start of a bidding war, with TCC expected to counter offer. If TCC loses, Thai Bev is set to reap divestment gains, but will miss out on synergies.

Reuters has reported that OUE is mulling a potential counter offer for F&N. The news agency, citing unnamed sources, also reported that Kirin is one of the possible partners it is in preliminary discussions with.

This looks like the start of a bidding war for F&N. We expect OUE to announce a higher bid, whether acting with another party or alone, and TCC to counter offer.

The F&B business is highly complimentary to Thai Bev’s fast growing non-alcoholic beverage business and TCC/Thai Bev will not want to lose it without a fight.

We believe Charoen has the means to counter offer. Forbes estimated his net worth to be S$8bn. Assuming
TCC comes up with a counter offer at S$11.22, at the high end of the IFA’s estimated fair value range, that would
mean a total consideration of S$11.4bn.

Adjusting for the S$5.6bn of APB cash sitting on F&N’s books, TCC would have to fork out S$5.8bn. That is certainly achievable given Charoen’s estimated net worth.

If TCC ends up losing, it will not reap the synergies, but enjoy a divestment gain. Thai Bev stands to gain between
S$300m and S$1.3bn for a bid in the range of S$9.5 to S$12.

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