Fraser & Neave Ltd. received a $1.1 billion offer for its serviced apartment business that could complicate Thai billionaire Charoen Sirivadhanabhakdi’s effort to gain control of the Singapore-based conglomerate.
F&N received the offer from Overseas Union Enterprise Ltd., a property affiliate of Indonesia-based Lippo Group, said two people with knowledge of the matter. The company disclosed the bid in a statement to the Singapore stock exchange today, without identifying the bidder.
The offer for the apartment business could trigger a further takeover battle for F&N and assets that range from real- estate to soft drinks. F&N’s board plans to say tomorrow that a separate bid from Charoen that values the entire company at about $10.3 billion isn’t compelling, people with knowledge of the matter said.
F&N shareholders last month agreed to sell its brewing business to Heineken NV, while Charoen’s TCC Assets Ltd. on Sept. 13 made a S$9 billion ($7.3 billion) bid for the 70 percent of the Singapore company he doesn’t already control.
Charoen may have to counter with a higher bid for F&N because the S$1.4 billion offer for the serviced residence business “is a premium to the value at which F&N is covering this property in their books,” according to Jonathan Foster, Singapore-based director of Global Special Situations at Religare Capital Markets.
“This gives the board some leverage now to point out that TCC is fundamentally mis-valuing the rest of the F&N assets,” he said. “It will be sensible for TCC to raise the offer.”

Undervalued Assets

F&N is likely to say tomorrow that the Charoen bid undervalues its properties and its brewing assets in Myanmar, according to three of the people with knowledge of the matter.
Still, F&N may say it deems the offer to be fair in the absence of a higher bid from another suitor, one of the people said.
Jennifer Yu, a spokeswoman for F&N, declined to comment. Vichate Tantiwanich, Thai Beverage’s spokesman, didn’t answer a call or respond to an e-mail seeking comment.

Serviced Apartments

F&N serviced apartments in Singapore, China, Australia had a book value of at least S$776 million as of June 30, based on Bloomberg calculations from a Oct. 8 company statement.
The hospitality business is part of F&N’s property unit, which gave the conglomerate about 30 percent of its 2011 revenue of S$6.3 billion. F&N got 12 percent of sales from soft drinks last year and 17 percent from dairies, according to data compiled by Bloomberg.
F&N rose 0.6 percent to S$8.93 as of 1:29 p.m. in Singapore today. The stock has been trading above the S$8.88 a share that Charoen offered in September. The company has 1.4 billion shares outstanding, according to data compiled by Bloomberg.
F&N said it won’t respond to the offer for the serviced apartments, citing takeover rules and the business’s value within the conglomerate’s property division, according to today’s statement to the Singapore stock exchange.
F&N shareholders last month agreed to sell the company’s 40 percent stake in Tiger beer maker Asia Pacific Breweries Ltd. for S$5.6 billion to Heineken. That deal is expected to close in November.

Conglomerate Break-Up

The agreement with Heineken spurred speculation that F&N’s remaining businesses could attract other bidders, prompting a break-up of the 129-year-old conglomerate.
Japan’s Kirin Holdings Co., which has a 15 percent stake in F&N, has said it is interested in its soft-drink and food businesses. The party making the bid for the residence business isn’t related to any directors or substantial shareholders, F&N said today. Hajime Kawasaki, Kirin’s spokesman, declined to comment.
Overseas Union in August said it is seeking acquisitions to almost double the assets to S$10 billion in as early as three years. T.L. Woo, head of investor relations at the company, declined to comment.
Charoen’s unlisted business TCC Group has a real-estate unit. His Thai Beverage Pcl, which sells the Chang brand of beer, gets almost all its revenue from its home market. Thai Beverage shares jumped 7.7 percent to 42 Singapore cents at 12:31 p.m.
Charoen, 68, was born and raised in Bangkok’s Chinatown district. He bid for the rights to operate distilleries during a liberalization of the nation’s liquor industry, before expanding into beer, alcohol, sugar, and packaging businesses.

source: http://www.sfgate.com – info from Bloomberg

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