TCC Assets Ltd, a firm controlled by Charoen, offered to pay S$8.88 for the F&N shares that the billionaire did not already own. But industry watchers say the Thais need to pay more if they are serious about gaining full control of F&N.
"The offer is not convincing and runs the risk of being voted down by the F&N board," CIMB Research analyst Donald Chua, who has a target price of S$9.85 for F&N, wrote in a note.
The offer sparked a rally in F&N shares on Thursday, which ended 4.8 percent higher at a record S$8.92.
Since the offer restricts the Thais to buying F&N shares on the open market at prices not exceeding S$8.88, they will now need to raise their offer if they want to build their interest in F&N, traders said.
The 36.8 million F&N shares that changed hands on Thursday included block deals totaling 23.8 million shares priced at S$8.88 or below, traders said.
That means Heineken needs to rally shareholders with a collective interest exceeding Charoen's stake to push through its $6.3 billion purchase of all the shares in APB, including F&N's stake in the maker of Tiger beer.
Under Singapore law, a bidder must make a mandatory offer for a company if its stake reaches 30 percent.
"It would appear that TCC is likely to thwart the sale of APB to Heineken. One possible outcome is that if TCC is successful in gaining control of F&N, it would want to renegotiate the sale of APB to Heineken," Jit Soon Lim, an analyst at Nomura, said in a note to clients.
Besides the two Singapore lenders, Morgan Stanley is also advising the Thais.
"One risk of the scenario is that the sale (of APB) falls through and further strains the relationship with Heineken, with implications for marketing rights for Heineken by APB in Asia," Nomura's Lim said.
Heineken beer accounts for about 30 percent of APB's sales by volume, according to analysts.
ThaiBev has not said how it will vote at the September 28 meeting, and banking sources say TCC may be prepared to let go of APB and focus on F&N's remaining food-and-drinks and property businesses.
The Thais recently bought out Pepsi's bottling business in Thailand, and Charoen already has substantial investments in Singapore property.
Forbes estimates Charoen's wealth at $6.2 billion, while Singapore-based consultancy Wealth-X has a higher estimate of $6.3 billion. Wealth-X also said Charoen's wife has about $1.4 billion of stock and assets in her name.
"We hold F&N in high regard, and we believe its long-established track record and success in its core businesses will be beneficial to our group," Thapana Sirivadhanabhakdi, Charoen's son and ThaiBev's chief executive officer, said in a statement.
ThaiBev's shares, which jumped nearly 3 percent in early trade on Thursday, finished unchanged at S$0.34.
For its part, Heineken only took note of ThaiBev's latest announcement. "The company will review the content carefully and has no further comment to make at this time," the Dutch brewer said.
Breweries contributed 41.1 percent of F&N's total revenue of S$4.02 billion for the nine months to June 30. Soft drinks and dairy products made up 29.2 percent, property was 21.3 percent and printing and publishing was 7.1 percent.
F&N is the leader in the soft drinks markets in Singapore and Malaysia, with a 24.5 percent and 26.9 percent market share, respectively, according to Euromonitor. But F&N's reach in the rest of the region is weak and its Asia-Pacific market share is only 0.3 percent.
F&N's other soft drinks assets include distribution networks in emerging markets such as Vietnam and Myanmar.
F&N said on Wednesday that its board recommended Heineken's offer partly because of the attractive valuation and limited options for the stake held by their joint venture in APB.
Heineken had first right of refusal to the 65 percent of APB shares held by the joint venture between F&N and Heineken. - Reuters
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