Why Fraser & Neave Is Staying Listed



Reuters

When once low-profile Thai billionaire Charoen Sirivadhanabhakdi embarked on a bidding war for Singapore’s Fraser Neave Ltd. last year, and won it, investors were taken aback. Now they have another surprise in store: Mr. Charoen said through his holding companies that he isn’t planning to delist the real estate to soft drinks maker after all. Analysts had expected Mr. Charoen to take Fraser Neave private so he could consolidate the business with his other companies.

Mr. Charoen owns 29% of Fraser Neave through Thai Beverage, which brews Chang beer, and around 61% through TCC Asssets, which has hotel and office properties throughout Asia as well as New York. Neither TCC Assets nor Thai Beverage disclosed why the stock would stay listed, but Malaysian brokerage CIMB says a listing would allow TCC, which geared up when it ponied up S$8.5 billion to buy its FN stake, to better use that stake as collateral. FN also has better brand awareness in food and beverage than ThaiBev , CIMB said.

Jonathan Foster, director of special situations at Religare, offers another potential reason for the decision: “What it really does is turn ThaiBev into a holding company structure,” with three main units, FN Oishi Group PCL and Sermsuk PCL .

“They (Charoen’s companies) seem to like the idea of having a Singapore-listed subsidiary, especially a blue-chip name,” Mr. Foster said.

He expects FN to become the main property-based listing vehicle for the family, allowing it to inject assets and raise equity.

The recent volatility in ThaiBev’s shares isn’t surprising, he says, as initially, analysts had expected a simpler company structure that Mr. Charoen would clearly control. With the Singapore conglomerate publicly traded again after being suspended since Feb. 19, if TCC or ThaiBev wants to take over parts of FN, they will have to make a formal offer, get an independent valuation and shareholder approval. It’s a more complicated, process, they say.

FN ended down 4.7% at S$9.00 on Monday, its first day of trade resumption. ThaiBev rose 6.2% to S$0.60 after dropping 7.4% last week.


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