OCBC/APB/F&N

OCBC/APB/F&N: Citi follows up on offer analysis after OCBC and its 87% subsidiary Great Eastern Holdings (GEH) announced that they have received an offer to purchase their combined stakes in Fraser and Neave (F&N, 18.2%), and Asia Pacific Breweries (APB, 7.92%). Bloomberg cites TCC, a conglomerate owned by Thai Billionaire haroen Sirivadhanabhakdi, to be the interested party, via is listed entity Thai Beverage. Thai Beverage has also since this morning clarified that the Co. is presently in discussion to explore the possibility of acquiring the shareholdings from OCBC. Citi provide its estimates of potential gains should these stakes be sold, with some assumptions as to original carrying cost, and what stakes are owned by the co’s, rather than the policyholder funds of GEH. Estimate that OCBC could (at current share prices) realize a gain of $647m ($0.188 per share), while GEH could enjoy a gain of $555m ($1.17 per GEH share, or $0.14 per OCBC share at 87%). OCBC's capital management initiatives in the past have typically been share buybacks rather than special divs, but in a Basel 3 world banks have generally sought to hold excess capital rather than pay it out. Separately CIMB note that assuming a 1) 26x PE for APB ($40 a share) and 2) a 24x PE for FNH, house estimate SOP valuation for FNN to be $9.20-9.30. House believe that a three-way tussle with Kirin (15% stake in FNN) and Heineken (42% stake in APB) for FNN’s F&B assets could emerge. Central to this theme is APB, which house believe all 3 parties would want to control.