Thai Bev poised to ride on F&N's drink-distribution business

But here's what it should do first.

According to Nomura, TCC/Thai Bev have emerged the winner after a tense and protracted showdown with OUE. The two entities now own a combined stake of at least 74% of F&N (13 Feb) after Kirin sold its 15% stake.

This offer will remain open until 5.30 pm on 18 Feb. Control is well assured, the only variable is whether F&N will stay listed.

Here's more from Nomura:

This is a defining victory for Thai Bev. We highlighted in our initiation report (4 Sep 12, An emerging force) that Thai Bev could be an emerging force in South-East Asia’s beverage industry by securing control of F&N.

Having done that, we believe further share-price upside now lies in reaping synergies from controlling F&N’s consumer businesses. Importantly, Thai Bev will evolve from a single-country consumer business with minimal growth to a regional consumer franchise with growth. (Thai Bev’s Chang Beer means “elephant” in Thai).

Synergies could stem from porting F&N’s established green teas and soft drinks into Thailand. Also, if Oishi’s products and Chang Beer can ride on F&N’s drink-distribution channels, that will help enlarge the market of Thai Bev’s owned brands as well.

To set all these in motion, it may be easier for the F&B assets of F&N to be moved directly under Thai Bev. A corporate restructuring might be the first step before Thai Bev shifts its focus to extracting synergies.

Traditionally, TCC tends to own its varied business interests in single-business vehicles, so a corporate restructuring could make things a lot cleaner.

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